Walkingstick
[Iraqi bank friend Aki update]
AKI: When you get to 1,000 to 1, then you will see the pips move quick...by supply and demand. That is what's going to determine it. We may not see 'the flip of a switch' but based on supply and demand, we think we will.
WALKINGSTICK: What is your opinion about two months?
AKI: It can, but it is highly unlikely because as of the 10th we are fully restricted to only use our currency. Nobody will use anything other else except the dinar... 1 to 1 can come out at any time they choose.
What does this mean?
According to Aki, Iraq appears to be moving into a new phase where the Iraqi dinar becomes the exclusive currency used for domestic transactions. If demand for the dinar continues to rise while its use becomes mandatory inside the country, market forces could begin playing a much larger role in determining its value.
Aki believes that once the exchange rate reaches approximately 1,000 IQD to 1 USD, the market could react much more rapidly. At that point, he expects supply and demand to become the primary drivers of price movement, resulting in quicker changes in the exchange rate than what has been seen during previous years.
His comments also suggest that the transition may not necessarily occur through one single overnight announcement. Instead, the exchange rate could begin adjusting more dynamically as liquidity, trading activity, and demand for the Iraqi dinar increase. In other words, the market itself may accelerate the movement once certain monetary conditions are reached.
Another important point Aki highlights is the July 10 restriction, which he says limits domestic transactions to the Iraqi dinar. If fully implemented, such a policy would naturally increase demand for the national currency, reduce reliance on foreign currencies within Iraq, and reinforce the dinar's role throughout the country's banking and commercial sectors.
Finally, when asked about the possibility of a 1:1 exchange rate, Aki states that it could be introduced whenever the authorities decide. His view is that once the monetary reforms, currency usage, and market conditions are aligned, the timing of such a move becomes an administrative decision rather than a technical limitation.
Overall, Aki's perspective is that Iraq's monetary reforms are progressing toward a stage where market forces, exclusive domestic use of the dinar, and central bank policy work together, potentially allowing the exchange rate to respond much faster than in the past.
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