Iraq has devalued its national currency, with banks and exchange companies selling dollars to the public at 1,520 dinars each from Wednesday 7 October 2026, 200 dinars higher than the previous price, according to Al Jazeera.
The report said the cabinet approved the new exchange rates on Tuesday, following an emergency recommendation from Finance Minister Falih al-Sari and the governor of the Central Bank of Iraq (CBI). The move undoes the previous government’s decision to strengthen the dinar, Al Jazeera said, which had set the public rate at 1,320 dinars per dollar.
The fiscal backdrop
Just before the devaluation, the government adopted its 2027 budget, which plans spending of 217 trillion dinars (about $166 billion) and expects a deficit of more than 40 trillion dinars ($30 billion), according to Al Jazeera. The outlet linked the shortfall to disruption of shipping through the Strait of Hormuz since fighting began in late February. It said Iraqi oil exports, most of which must pass through Hormuz, stood at 2.34 million barrels a day in August, against a pre-war average of 3.6 million.
Al Jazeera quoted Prime Minister Ali al-Zaidi as saying last month that Iraq faces “extraordinary economic challenges” and has lost about $60 billion in oil revenue. It reported that oil revenue pays for more than 90 per cent of the federal budget and that the CBI’s foreign currency reserves fell from about $106 billion before the war to roughly $80 billion by late August. The Central Bank described the decision as a “strategic step” to steady public finances.
Opposition in parliament
Dozens of MPs said in a joint statement that they had not been told how or why the decision was made and that the central bank should have explained it to parliament first, according to the report. MP Aziz Nasser al-Shammari, speaking for the group, said: “Waging war on the poor like this is wrong.” Hassan al-Asadi, who leads the al-Nahj National Alliance bloc, suggested alternative ways to balance the budget, such as cutting unnecessary spending. The finance minister and the central bank governor were due to appear before parliament on Thursday, the report said.
Iraqi analyst Mohammed al-Saffar told Reuters that the measure “gives the government more dinars for each dollar of oil revenue, but raises import costs and reduces households’ purchasing power”. Al Jazeera added that most Iraqis cannot obtain dollars at the official rate and pay the parallel-market price, which rose after the new rate took effect.
Why It Matters
The decision shows how a drop in export income can push a government towards trade-offs between balancing its books and protecting household budgets. Because the official rate matters mainly to the state, while households deal with the parallel market, the debate in parliament is likely to centre on who bears the cost. The finance minister’s and central bank governor’s explanations to MPs will indicate whether the policy faces pressure to change.
Leave a Reply