Saturday, November 29, 2025

BRUCE & MILITIAMAN: Iraq Dinar Projections ($3.22 – $4.25) & Key Highlights #iqd

 


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💹 Exchange Rate Dilemma: Balancing Deficit & Stability 💹

 💹 Exchange Rate Dilemma: Balancing Deficit & Stability 💹

📊 2026 Budget Pressure: Iraq faces a widening deficit of 70–90 trillion dinars, with limited domestic borrowing options.

💡 Government Options:

  • Cut non-salary operating expenses by 15–20%

  • Automate revenue collection & reform financial management

  • Reduce privileges of senior officials & encourage mandatory savings

  • Sell or invest state assets for quick funds (≈10–15 trillion dinars)

⚡ Exchange Rate as a Tool:

  • Raising the rate from 1300 → 1500–2000 dinars could generate 15–70 trillion dinars, bridging the financing gap fast.

  • Acts as a short-term but effective tool when traditional measures fall short.

🛠 Recommended Approach: Combine reforms + asset sales + gradual rate adjustment (1500–1700 dinars) to reduce deficit pressure without over-relying on borrowing.

📌 Key Insight: Strategic exchange rate adjustments can stabilize the economy while reforms address long-term structural issues.

🔗 Stay Connected:

The exchange rate dilemma: Government alternatives between deficit financing and economic stability

By Dr. Ahmed Hadhhal, Professor of Financial Economics

In light of the financial indicators for the 2026 budget, it appears that the exchange rate will be the focus of economic decision-making and the last line of defense against the widening deficit gap, which is expected to reach 70–90 trillion dinars.

 With the slowdown in non-oil revenues, the rise in current expenditures, and the decline in the ability to borrow domestically, fiscal policy enters a critical area that leaves the government with limited and difficult options.

The first logical solution is to rationalize spending and reduce non-salary operating expenses, and to control non-oil revenues through a strict automation and collection system, as well as reforming the state's financial management and reducing the spread of administrative and financial corruption.  

This can significantly reduce the deficit. Reducing privileges and imposing mandatory savings on senior officials can add a large amount to public finances, in addition to this measure being a gesture of goodwill to society so that it accepts the high costs of reform. 

Selling or investing part of the state's assets may provide between 10-15 trillion dinars, an amount that covers only a limited part of the gap. Even when these measures are applied together, the deficit remains high and cannot be fully financed through domestic borrowing without risking a large jump in domestic debt. Therefore, reform must be real through a structural "surgical operation" on spending and revenue items.

The exchange rate appears to be a short-term option, as the government recognizes that the resources generated by raising the exchange rate are the fastest and most effective way to bridge the financing gap.

 Trends and potential scenarios indicate that raising the rate from 1300 to 1500-2000 dinars would provide between 15 and 70 trillion dinars, depending on the level of the increase and the volume of dollar sales.

 This makes adjusting the exchange rate a readily available financial tool that the state resorts to when traditional methods fail to close the gap.

I believe this policy represents a price the economy pays for maintaining the current monetary policy throughout the period of pegging.

Therefore, the government might consider integrating financing tools instead of relying on a single option:

1- A genuine reduction in operating expenses by 15-20%.
2- Reform of the spending system and financial oversight to ensure that artificial inflation in expenditures is not repeated.
3- Selling and investing specific highly liquid assets to secure quick resources.

A gradual and well-considered adjustment of the exchange rate towards 1500-1700 dinars as a starting point is advisable, with the risk of reaching 2000 if oil revenues do not improve.

Combining these tools together reduces the deficit pressure to limits that can be financed internally, and the central bank may pay for this adjustment through its reserves, given that most government spending is directed towards consumption and is considered a tool for effective aggregate demand directed towards imports financed and covered by the exchange rate.

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MILITIAMAN: 💥 Iraq Dinar Update: Major Moves Ahead! 💥

 💥 Iraq Dinar Update: Major Moves Ahead! 💥

🔥 Lower Denomination Bank Notes Ready 🏦

The lower denomination notes—the ones with three zeros removed—are designed, contracted, and ready for release. This is a crucial step for any dinar revaluation, signaling that the financial system is preparing for action.

🌍 New Season in Iraq: Reforms & Progress

Iraq is entering a new economic season. Recent reforms are moving swiftly, and the parallel currency market is reacting fast . These changes indicate real momentum, even if authorities remain quiet.

📉 Parallel Market Dips: Key Indicator

The spread in the parallel market has dropped from 1450 → ~1310–1315. This shows that illegal holders are offloading currency

, trying to avoid risk ahead of official changes.

💡 Why it matters: The dip signals market insiders are preparing for a potential revaluation. Keeping an eye on these numbers is essential for investors.

⚡ Quick & Smooth Changes Possible

History shows that Iraq’s currency adjustments can happen instantly, with minimal disruption, just like the last adjustment by Alaq. Market participants should be ready for fast-moving developments.

Read also: Bank Appointment for Currency EXCHANGE Instructions & Checklist

💡 Key Takeaway

Watch market indicators closely. The parallel market, bank note preparation, and reforms are strong signs that something significant could happen soon, even if no official announcements are made.

🔗 Stay Connected & Updated

🌐 Blog: dinarevaluation.blogspot.com
📲 Telegram: t.me/DINAREVALUATION
📘 Facebook: facebook.com/profile.php?id=100064023274131
🐦 Twitter/X: x.com/DinaresGurus
🎥 YouTube: youtube.com/@DINARREVALUATION

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