💱 “IMF Clarifies Iraq’s Exchange Rate: What’s Really Going On?” 🇮🇶📊
⭐ Highlights
➡️ IMF Explains Iraq’s Exchange Rate Framework
Iraq’s exchange rate—both de jure and de facto—remains a conventional peg arrangement, meaning the CBI pegs the dinar to a stable reference. 🔒
Under Iraqi law, the Central Bank Board holds full authority over exchange rate policy decisions.
➡️ Official Rate Set at 1,320 IQD per USD
Since February 8, 2023, the official exchange rate has been fixed at ID 1,320, based on the CBI’s daily bulletin for gold and major currencies. 💵
➡️ Changes Since the Last IMF Article IV Review
Iraq still uses transitional arrangements under Article XIV, but no longer keeps restrictions under this provision.
The country currently has no current account restrictions and no Managed Currency Pegs (MCPs) in place. ✔️
➡️ Big Shift in 2025: All International Transactions Through Banks
As of January 2025, all international transactions are processed through commercial banks using correspondent banking relationships (CBRs) . 🌐🏦
This is meant to increase transparency, strengthen compliance, and modernize Iraq’s banking system.
➡️ Weekly Replenishment & Compliance Checks
The CBI replenishes foreign currency balances weekly based on actual market demand.
Regular audits ensure all funds follow AML/CFT regulations (anti–money laundering / countering the financing of terrorism). 🔍
Private banks are being pushed to expand their CBR networks, especially with non-U.S. banks, to diversify global connections. 🌎
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IMF EXPLAINS IRAQ’S EXCHANGE RATE ARRANGEMENT
16th July 2025 in Iraq Banking & Finance News, Politics
By John Lee.
The International Monetary Fund (IMF) has issued a brief explainer on Iraq’s exchange rate arrangement. As part of a follow-up to last week’s report on the state of the Iraqi economy, the IMF clarified as follows:
“Exchange Rate Arrangement
“Iraq’s de jure and de facto exchange rate arrangements are classified as a conventional peg arrangement. The Central Bank Law gives the Board of the Central Bank of Iraq (CBI) the authority to formulate exchange rate policy.
“Effective February 8, 2023, the official exchange rate was set at ID 1,320 according to the closing prices of the daily bulletin of gold & main currencies published on the CBI website (www.cbi.iq).
“There has been a change to Iraq’s exchange system since the last Article IV Consultation. Iraq continues to avail itself of the transitional arrangements under Article XIV, Section 2 but no longer maintains any restrictions under this provision. Iraq does not maintain any current account exchange restrictions or MCPs [Managed Currency Pegs]. Starting January 2025, all international transactions have been routed through commercial banks via their correspondent banking relationships (CBRs).
“The Central Bank of Iraq (CBI) replenishes these balances weekly based on foreign exchange demand and conducts audits to ensure that the allocated funds are used in compliance with AML/CFT regulations. Private banks are also encouraged to broaden their CBR networks, particularly with non-U.S. financial institutions.”
