THE RISE IN THE VALUE OF THE NATIONAL CURRENCY HAS LOCAL AND INTERNATIONAL CAUSES.
The Iraqi dinar’s exchange rate against the US dollar has witnessed a significant improvement over the current period, supported by a number of internal and external factors. Most notably, the country’s large financial reserves, the prudent monetary policies pursued by the Central Bank of Iraq, and signs of a thaw in US-Iranian relations have combined to boost the value of the national currency.
Deputy Governor of the Central Bank of Iraq, Dr. Ammar Hamad, said that the improvement in the Iraqi dinar’s exchange rate against the dollar in local markets is due to the central bank’s recent policy.
financial reserves
He added that the country’s massive financial reserves are one of the main reasons behind the improvement in the value of the dinar against the dollar, and we expect the dinar’s value to continue to improve in the coming period. He pointed out that the Central Bank of Iraq is working to consolidate the national currency by adopting policies that are consistent with Iraq’s financial capabilities and the requirements of the national economy.
dollar flow
Dr. Nabil Al-Abadi said: “The past few days have witnessed a significant improvement in the exchange rate of the dinar against the dollar, which is the result of a combination of internal and external factors. On the monetary policy side, the Central Bank has taken strict measures, including restricting the flow of dollars through auction platforms and imposing strict oversight on banks. It has also raised the interest rate on dinar deposits, which has stimulated the transfer of some cash liquidity. External factors, such as the improvement in oil prices and the accompanying increase in foreign reserves, have also contributed to this improvement.”
Stabilization
He added that these measures, while effective in achieving short-term stability, remain subject to several risks. The Iraqi economy’s dependence on oil revenues makes it hostage to global market fluctuations. Furthermore, some austerity measures, such as import restrictions, could negatively impact citizens’ purchasing power if they are not accompanied by policies that support local production.
productive sectors
He stated that ensuring the sustainability of this improvement requires structural reforms, starting with diversifying the economic base and reducing dependence on oil, through developing productive sectors such as agriculture and industry. This also requires a comprehensive overhaul of the banking system and simplifying customs procedures to boost non-oil exports, as well as enhancing investment confidence through stabilizing legislative policies.
He stated that improving the exchange rate is not an end in itself, but rather must be a starting point for deeper economic reform. International experience demonstrates that sustainable monetary stability can only be achieved through a productive economy capable of confronting external shocks.
global pressure
Financial expert Dr. Mustafa Akram emphasized that while there is a reason for the gap between the official exchange rate and the parallel exchange rate of the dinar against the dollar, the gap has its causes. He pointed out that the opening up between the United States and the Islamic Republic has eased global pressure on remittances to Iran, reducing demand for the dollar in local markets and strengthening the value of the national currency. This coincides with ample supply from the Central Bank in the form of remittances and other forms of financing, which necessitates strengthening this phase.
electronic card
He pointed out the importance of the Central Bank of Iraq taking action to reach an agreement with the United States and establish an official platform for transactions by creating an electronic payment card for use in Iran, Russia, and other sanctioned countries. This would reduce demand for dollars, he noted, noting that this would serve small traders and travelers, address many problems, reduce smuggling and illegal trade, and increase the value of the local currency.