Iraqi Dinar Update: Devaluation Warnings, Fiscal Pressure & a Major Shift in US–Iraq Relations
New articles shared by Clare highlight two very different but deeply connected narratives coming out of Iraq right now. One focuses on economic pressure and currency risk, while the other signals a historic geopolitical shift that strengthens Iraq’s sovereignty on the global stage.
Together, these stories reveal the tension between short-term fiscal challenges and long-term national transformation.
⚠️ Disclaimer
This report reflects opinions, interpretations, and publicly available articles. It is for informational purposes only and should not be considered financial advice. Always consult a qualified professional before making financial decisions.
📉 Iraqi Economist Warns of Possible Dinar Devaluation
🧠 What the Economist Is Saying
In the article titled “Iraqi Economist Warns of Possible Dinar Devaluation Amid Fiscal Pressures,” economist Al-Mashhadani raises concerns about Iraq’s financial outlook.
“Growing discussion within financial and government circles points toward a potential devaluation of the Iraqi dinar against the U.S. dollar, despite its serious social consequences.”
According to the article, key pressures include:
Falling global oil prices
Heavy reliance on oil revenues
Rising government obligations, including:
Salaries
Wages
Operating expenses
Forecasts such as JPMorgan’s outlook on future oil markets are cited as contributing to these concerns.
💰 Why Devaluation Is Being Discussed
Al-Mashhadani suggests that the next government may face limited fiscal options:
“The next government may find no financial exit except changing the exchange rate in order to pay salaries, wages, and operating expenses.”
From a traditional economic perspective, currency devaluation is often discussed as a tool to:
Increase local currency liquidity
Offset revenue shortfalls
Temporarily ease budget stress
However, the article also acknowledges the serious social consequences, especially for Iraqi citizens.
⚖️ Counterbalance: Why This Is Not the Whole Story
While devaluation talk exists, it contrasts sharply with:
Ongoing White Paper reforms
Massive investment in banking modernization
Long-term goals to increase purchasing power, not reduce it
This creates a dual narrative:
Short-term fiscal anxiety
Long-term structural reform
Both can exist at the same time.
🌍 Iraq Welcomes Historic US Congressional Vote
The second article, “Iraq welcomes the cancellation of the two US authorizations for the use of military force against it,” marks a major geopolitical milestone.
🏛️ What Happened?
The US Congress, both House and Senate, voted to:
Repeal the 1991 and 2002 Authorizations for Use of Military Force (AUMF) against Iraq
This repeal is included in the 2026 National Defense Authorization Act
Iraq officially welcomed the decision
“The Iraqi Ministry of Foreign Affairs expressed its welcome for the historic vote…”
🕊️ Why This Matters for Iraq’s Future
The repeal of these authorizations:
Symbolically ends decades-old war mandates
Strengthens Iraq’s sovereign standing
Improves diplomatic and economic confidence
Supports Iraq’s transition from conflict state to normal international partner
Iraq also expressed hope for President Donald Trump’s ratification of the bill.
🔗 Connecting Economics & Sovereignty
These two articles may seem unrelated—but they are not.
A country’s currency strength depends on:
Political stability
Sovereignty
International trust
Institutional credibility
Ending outdated war authorizations:
Reduces geopolitical risk
Encourages foreign investment
Supports long-term currency confidence
❓ Q&A – Featured Snippets
Is Iraq planning to devalue the dinar?
There is discussion among some economists, but no official decision has been announced by the Central Bank of Iraq.
Why would devaluation be considered?
To address budget pressure caused by oil price fluctuations and government expenses.
Does devaluation contradict monetary reform?
Short-term discussions do not cancel long-term reform goals; they reflect competing fiscal realities.
Why is the repeal of US military authorizations important?
It strengthens Iraq’s sovereignty and improves its international political and economic standing.
📌 Featured Insight
While some Iraqi economists warn of potential dinar devaluation due to fiscal pressure, Iraq simultaneously strengthens its sovereignty through historic US legislative actions, signaling long-term structural change.
🧭 Final Thoughts
Iraq stands at a crossroads. Economic pressure fuels debate about short-term solutions, while geopolitical victories and institutional reforms point toward long-term normalization and strength.
Understanding both narratives is essential. One explains the fear. The other explains the future.
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Clare
Article: "Iraqi Economist Warns of Possible Dinar Devaluation Amid Fiscal Pressures "
Quote: "Al-Mashhadani said growing discussion within financial and government circles points toward a potential devaluation of the Iraqi dinar against the U.S. dollar, despite its serious social consequences...With falling oil prices and forecasts such as JPMorgan’s outlook on future oil markets, the next government may find no financial exit except changing the exchange rate in order to pay salaries, wages, and operating expenses"
Article: "Iraq welcomes the cancellation of the two US authorizations for the use of military force against it"
Quote: "The Iraqi Ministry of Foreign Affairs expressed its welcome for the historic vote by the US Congress, in both the House of Representatives and the Senate, to repeal the 1991 and 2002 authorizations for the use of military force against Iraq, within the 2026 National Defense Authorization Act, stressing its hope for President Donald Trump’s ratification of the bill."
