🇮🇶 WHAT DOES THIS MEAN FOR IRAQ'S MONETARY REFORM?
🇮🇶🚀 IRAQ'S EXCHANGE RATE REFORM!
This article explains that Iraq is working to close the gap between the official exchange rate and the parallel dollar market through regular dollar shipments, improved distribution mechanisms, and banking reforms.
🔥 WHAT ARE THE EXPERTS PROPOSING?
1. INCREASING DOLLAR SHIPMENTS 💵
Experts believe that regular deliveries of US dollars will help reduce pressure on Iraq's foreign exchange market and stabilize the dollar's price.
2. MONTHLY SHIPMENTS OF UP TO $800 MILLION 🚀
Economic expert Aqeel Jabr Ali Al-Muhammadawi estimates that:
Approximately $500 million could arrive monthly.
Monthly shipments could increase to $700–800 million in the coming months.
These are expert projections, not officially confirmed amounts.
3. IMPROVING ACCESS TO US DOLLARS 🏦
It is not enough for dollars to arrive at the Central Bank. Traders, importers, and citizens must be able to access foreign currency through official banking channels without unnecessary administrative obstacles.
4. THE 2027 BUDGET WILL BE CRITICAL 📊
Experts emphasize coordinating fiscal and monetary policies, controlling the budget deficit, stabilizing oil revenues, and fighting currency smuggling.
5. CLOSING THE EXCHANGE RATE GAP 🔥
The objective is to reduce the difference between Iraq's official exchange rate and the parallel market rate. However, experts caution that both rates may not reach parity in the near term.
🚨 WHAT IS THE MOST IMPORTANT DETAIL?
Economist Diaa Al-Muhsin explains that the real measure of success is not simply announcing new dollar shipments.
Success means:
Consistent dollar supplies.
Efficient distribution through official channels.
Easier financing for legitimate imports.
Reduced dependence on the parallel market.
A sustained reduction in the exchange rate gap over several consecutive weeks.
💥 WHAT DOES THIS MEAN FOR IRAQ'S MONETARY REFORM?
This article highlights a fundamental part of Iraq's monetary reform: currency stability, confidence in the banking system, and control of the parallel market must be strengthened.
A sustained narrowing of the exchange rate gap would be a positive sign of greater stability in Iraq's currency market.
However, two processes must be understood separately:
CLOSING THE EXCHANGE RATE GAP: Reducing the difference between the official and parallel market rates.
REVALUING THE IRAQI DINAR: An independent Central Bank decision to officially change the dinar's exchange rate.
One does not automatically guarantee the other.
🇮🇶 THE BOTTOM LINE
Iraq is working toward greater dollar availability, improved banking distribution, stronger financial controls, and a more stable economic framework for 2027.
The real test will be whether these measures can sustainably narrow the exchange rate gap and strengthen confidence in the Iraqi dinar.
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EXPERTS PROPOSE SOLUTIONS TO END THE DOLLAR GAP
Financial and economic experts have proposed a roadmap for achieving sustainable stability in the local exchange market. While they pointed out that the announcement of the arrival of new cash shipments of dollars should be accompanied by flexible distribution mechanisms and accessible official channels that meet the needs of traders and citizens, they warned that the lack of regular currency flow and the complexity of commercial transfer procedures will keep the parallel market as a major haven that fuels the current price gap.
Integration of efforts
In this regard, the Executive Director of the Association of Iraqi Banks, Ali Tariq, said that providing dollar shipments and enhancing the regularity of their arrival to Iraq represents an important step to contain the pressures witnessed in the exchange market, noting that the success of this step is linked to the government’s ability to create the appropriate political and economic conditions, and to ensure the continued flow of foreign currency and facilitate its access to those entitled through official channels.
Tariq added, in an interview with Al-Sabah, that Prime Minister Ali Falih Al-Zaidi achieved important economic gains as the top executive in coordinating efforts between government institutions, the Central Bank and relevant authorities, in addition to the importance of his actions in easing the political and diplomatic atmosphere, and building understandings that contribute to ensuring the continuity of shipments and avoiding any interruption that may negatively affect market stability and the confidence of traders.
He believed that the importance of the government’s role is not limited to providing dollars, but extends to addressing the structural reasons that drive its price up in the parallel market, explaining that this is achieved by facilitating commercial transfer procedures, reducing administrative complexities for importers, and ensuring that foreign currency reaches legitimate activities to prevent additional informal demand.
Tariq explained that the regularity of shipments carries a reassuring message to traders and citizens that the monetary authorities have the necessary tools to deal with pressures, noting that the market is not affected by the size of the supply alone, but also reacts to expectations, confidence indicators, and the clarity of government directions.
2027 Budget
For his part, economic and financial expert Dr. Aqeel Jabr Ali Al-Muhammadawi stated that the regularity and volume of shipments are key factors in narrowing the gap between the official exchange rate and the parallel market rate. He predicted monthly shipments of around $500 million, with the possibility of this rising to $700-800 million in the coming months, according to his forecast.
Al-Muhammadi told Al-Sabah that the regularity of flows is much more important than the arrival of large shipments individually, stressing the need to direct the dollar to meet the actual demand, especially for travel, remittances, trade and import purposes, through flexible and quick procedures that limit resorting to the black market.
He pointed out that the stability of the exchange rate is linked to the credibility of monetary policy and the clarity of its directions, calling for the adoption of a declared course for fiscal and monetary policy, especially within the framework of the 2027 budget, to reduce speculation and enhance confidence in the market.
While he pointed out the importance of stabilizing oil revenues and providing the necessary financing for the deficit, in conjunction with controlling the movement of currency across borders, and reducing smuggling, dollarization, and pricing in dollars within local markets, he suggested that the shipments would contribute to calming the market in the short term, ruling out the two prices matching in the near term unless financial conditions improve and official channels for obtaining dollars become available.
Success standard
In this context, economist Dr. Diaa Al-Mohsen supported this proposal, pointing out that the new shipments may alleviate the pressure on the dollar, while noting that they alone do not guarantee a sustainable decrease, as their effectiveness depends on the actual size of cash demand, the regularity of their arrival, and the ease of their distribution.
Al-Muhsin explained in an interview with Al-Sabah that import financing is mainly done through bank (credit) transfers, so the adequacy of cash shipments cannot be measured by comparing them to Iraq’s total foreign currency needs. He added that the arrival of dollars in the Central Bank’s vaults does not mean their automatic transfer to the market, unless those entitled to them can obtain them through official channels without obstacles.
He added that assessing the true impact requires clear data including the amounts actually distributed in the markets, the size of unmet requests and waiting periods, and the size of the cash stock available at banks, noting that improved distribution efficiency and continued supplies may contribute to calming prices and reducing “hedging demand” for the dollar.
Al-Muhsin warned that the continued difficulties in official transfers for traders may make any decrease limited or temporary, stressing that the criterion for the success of shipments is the reduction of the price gap for several consecutive weeks in conjunction with meeting the real demand, and not just a temporary decline in the price of the dollar after the announcement of the arrival of a new shipment.
The experts concluded in their view that the stability of the exchange market requires an integrated package that combines regular supply, efficient distribution, and facilitating the financing of legitimate trade, which ensures building confidence in monetary policy and reduces dependence on the parallel market, while praising the efforts of the Central Bank in this direction, and its steps aimed at fully controlling the parallel exchange rate.
