Iraq’s dinar has taken a step down against the US dollar, with the country officially resetting its exchange rate from around 1,300 dinars to 1,500 dinars per dollar. But in the market, the dollar is already fetching more than 1,700 dinars.The new official rate was decided at a Cabinet meeting on Tuesday night, according to Iraq’s central bank, which said the move was made “to meet the relevant financial, economic and monetary requirements.”The previous official exchange rate had been set in 2023. In practice, however, Iraq has always had a difference between the official rate and the rate used by exchange shops. That gap had widened in recent months, with the unofficial rate crossing 1,600 dinars to the dollar even before the official devaluation.After the new official rate was announced, the market rate climbed further to more than 1,700 dinars per dollar.The widening gap has come amid the US-Iran war, which has at times spilled over into Iraq, and disruptions to shipping through the Strait of Hormuz.Iraq’s economy relies heavily on oil exports, most of which were shipped through the strait before the war. Since the war began, Iraq has shifted to sending oil overland through Syria for export, a route that is more expensive and less efficient.Under the new official rate, Iraq’s Finance Ministry will sell dollars at 1,500 dinars per dollar, while consumers buying dollars from banks will pay 1,520 dinars per dollar.
