DINAR REVALUATION REPORT:
🇮🇶 The 3 Phases of the Iraqi Dinar Exchange Rate Reform
1. Closing the Gap Between the Official Rate and the Street Rate
✅ What does it mean?
The official exchange rate is set by the Central Bank of Iraq (CBI) for legitimate banking and trade operations.
The "street rate" refers to the rate in the informal market, which is often higher due to:
Limited access to dollars,
Weak enforcement of monetary controls,
A strong black market presence.
🎯 Goal:
Unify or closely align the official and parallel exchange rates to:
Improve transparency,
Reduce speculation,
Restore confidence in the national currency.
📉 Implications:
This phase requires:
Increasing official dollar supply,
Tightening anti-money laundering enforcement,
Improving regulation of informal markets.
It is a technically difficult but foundational step for economic stabilization.
2. Agreement with the IMF and Compliance with Global Standards
✅ What does it mean?
This phase ensures the Iraqi dinar complies with international financial standards, especially regarding:
Currency transfer transparency,
Anti-money laundering (AML),
Know Your Customer (KYC) regulations.
📋 Involves:
Collaboration with the International Monetary Fund (IMF).
Reforming the banking system:
Increase capital adequacy ,
Improve governance,
Enhance oversight and digital infrastructure.
🌍 Why is it important?
Achieving compliance allows Iraq to:
Regain international financial credibility,
Attract foreign investment,
Ensure full integration with the global financial system.
3. Engagement and International Integration
✅ What does it mean?
After stabilizing the exchange rate and meeting global standards, Iraq aims to actively engage with international financial markets and economic partners.
🌐 Involves:
Expanding financial inclusion (bringing more people and businesses into the banking system).
Encouraging foreign direct investment (FDI) in non-oil sectors.
Building bilateral and multilateral agreements for trade, finance, and cooperation.
Increasing the presence of the Iraqi dinar in international financial platforms (e.g., SWIFT, cross-border transactions).
🤝 Expected outcomes:
A more stable and attractive financial environment.
Increased use of the Iraqi dinar domestically (reducing dollarization).
Potential long-term appreciation of the dinar, backed by real economic reforms.
📌 Summary of the 3 Phases
| Phase | Objective | Key Outcome |
|---|---|---|
| 1. Close the exchange rate gap | Stabilize the official and street markets | Restore trust in the exchange system |
| 2. IMF agreement & compliance | Meet global standards, reform banking | Boost international confidence |
| 3. International engagement | Integrate Iraq into global economy | Attract investment & promote dinar use |
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SOURCE: DINARREVALUATION
