NO FEAR FOR THE DINAR… THE “MONETARY AUTHORITY’S” MEASURES ABSORB THE DOLLAR SHOCK AND PREVENT INFLATION
Since the beginning of 2026, and the Iraqi street is cautiously monitoring the display screens in the local “stock exchanges” (Al-Kifah and Al-Harithiya), where the past few days have witnessed fluctuations that have pushed the dollar exchange rate in the parallel markets to approach the threshold of 149 thousand dinars per 100 dollars.
With growing fears of a new wave of inflation, fundamental questions have arisen about the state’s ability to control the financial situation. However, a careful reading of the monetary policy landscape and recent government decisions confirms that Iraqi state today, it possesses structural “buffers” and comprehensive digitization that prevent this temporary rise from turning into a sustainable economic crisis.
The “unified price” strategy: The budget as a safety valve.
The first indication of the strength of fiscal policy lies in “legislative stability.” While the parallel market is in turmoil, the government addressed…Central Bank of Iraq Ministry of Finance Officially, regarding the 2026 budget, the exchange rate will remain fixed at 1,300 dinars to the dollar.
This insistence on maintaining the fixed rate for the third consecutive year sends a decisive message to speculators that the state will not be swayed by the fluctuations of the black market.
This system operates according to a precise financial sequence that prevents waste:
the Ministry of Finance sells dollars to the Central Bank at a rate of 1,300;
the Central Bank supplies banks at a rate of 1,310; and the banks sell them to merchants and the public for foreign exchange purposes at a rate of 1,320.
Maintaining the official rate fixed in the budget means that all government-subsidized basic commodities and raw materials will not be affected by the fluctuations of the parallel market.
Haider Ghazi, the media officer for the Central Bank of Iraq, attributes the recent rise in the parallel market to a purely technical and regulatory reason: the “pre-clearance customs duty.” Iraq no longer operates with traditional, outdated mechanisms; rather, it has transitioned to the global ASYCUDA system for managing customs.
This system requires the merchant to obtain a “permit” the digital transfer was made before the bank transfer was completed. This procedure, although it caused temporary pressure as a result of some merchants trying to evade it. Resorting to cash dollars from the black market is, in reality, a “surgical operation” to cleanse the economy of money laundering and smuggling. Once traders are fully integrated into this digital system, the demand for parallel dollars will disappear because trading through official channels (at 1320) will be cheaper and safer than buying from the black market (at 1490).
As for the Prime Minister’s financial advisor,Mazhar Muhammad Salih he clarifies the situation with a precise academic diagnosis, asserting that the current dollar fluctuation is “temporary and temporary.” The reason for this reassurance is that the parallel exchange rate has become “practically detached” from the actual income and consumption levels of citizens.
The decline recorded in the markets confirms the success of these policies. This morning, Sunday, the dinar began to recover immediately following the release of official data and clarifications from the Central Bank.
Ultimately, the government and the Central Bank are not merely acting as “observers,” but rather are working within an “institutional framework” that links the fixed exchange rate in the federal budget (1300), the digitization of customs through the ASYCUDA system to eliminate illicit trade, and the provision of cash to legitimate travelers and importers through banks.
This triad represents a “protective shield” preventing any speculative attempts from achieving their objectives. The message to the market today is clear: “Fiscal policy and monetary measures hold sway, and the Iraqi dinar is backed by legislative will and robust international reserves.” Consequently, any rise in the dollar will remain limited to the realm of “temporariness” and will not become an imposed economic reality.