Let’s solve a mystery: On confusion and the exchange rate of the Iraqi dinar  (2024)

Let’s solve a mystery: On confusion and the exchange rate of the Iraqi dinar (1)

Let’s solve a mystery: On confusion and the exchange rate of the Iraqi dinar

Muhammad Hilo

04 Jul 2024

This is the story of the dinar’s exchange rate against the dollar, and the chaos, corruption, and the parties who benefited and who were harmed by this ongoing crisis.

As a result of an accumulation of flawed policies in managing oil wealth, the Iraqi economy suffers from structural imbalances that hinder development and growth and prevent economic stability. These flawed government policies have used the large financial revenues generated from the oil sector to expand the state’s role in economic activity, enabling the domination of public sector institutions at the expense of the private sector. Thus, the private sector lives largely off the public sector. The significant expansion in the number of jobs in the public sector has reached a point where it has limited capacity to absorb the entire workforce.


Due to the COVID-19 pandemic and subsequent slowdown of the global economy, 2020 saw a significant decline in oil prices in global markets, which led to a decline in oil revenues. In response, the Iraqi government at that time deliberately reduced the value of the Iraqi dinar from 1182 dinars per dollar to 1450 dinars per dollar, as a means of maximising oil revenue and reducing the government’s financial deficit, an approach commonly taken by global governments. Although the requirements and conditions for the success of the currency devaluation policy were not met from an economic perspective, it mitigated the shock of the drop in oil prices and could have been a first step towards reform of the Iraqi economy.

On February 7, 2023, the Central Bank of Iraq (CBI) made the decision to raise the value of the Iraqi dinar against the US dollar, with a new price of 1300 dinars for every dollar instead of 1450. This decision came after the widening of the gap between the official exchange rate and the parallel exchange rate in the markets. This gap was a result of Iraqi compliance with the requirements of the US Federal Reserve and the restrictions imposed on US dollar transfers abroad, which led to an increase in prices in local markets, and which – along with decisions to raise the value of the currency – affected growth and economic stability. Changing the exchange rate twice in a short time served to undermine the credibility of the monetary policy and weakened the possibility of price stability.

Al-Kadhimi’s government…an accidental reform

Since 2003, the monetary authorities represented by the CBI have adopted a policy of stabilising the exchange rate to stabilise prices. According to Bank Law No. 56 of 2004, price stability is the stated goal of the CBI, a policy that has seen undesirable effects emerge more clearly over recent years. Finally, it became necessary to move towards another policy goal, which was to reduce the exchange rate with competitiveness and sustainability of the public budget as primary objectives.

When Mustafa Al-Kadhimi became Prime Minister in 2020, the country entered into a financial crisis, as a result of the parallel crises that struck the global economy: the outbreak of COVID-19, the shutdown, and the sharp economic decline. Oil prices collapsed globally, and the Iraqi government was unable to pay public sector workers’ salaries. This was a result of the rentierism of the Iraqi economy, as oil contribution to the general budget exceeds 90 percent and makes up about 60 percent of the gross domestic product.

Executing recommendations of a draft white paper presented by then Minister of Finance, Ali Allawi, on December 19th, 2020, the CBI took the decision to reduce the value of the Iraqi dinar against the US dollar by 22.7 percent, from 1,190 to 1,460 dinars per dollar.

The Kadhimi government would not have had economic and financial reform on its agenda had it not been for this crisis. This step led to an unplanned reform. However, this policy succeeded in reducing the federal budget deficit, as the government saved approximately 20 trillion dinars as a result of reducing the exchange rate. However, foreign reserves at the CBI rose to $64 billion in 2021, with a growth rate of 18.5 percent compared to 2020 when foreign reserves sat at $54 billion.

US sanctions…going backwards

The turmoil in the Iraqi exchange markets increased in the final months of 2022 due to increased restrictions on dollar transfers and the work of the external transfer auditing platform. This included controls imposed by the US Federal Reserve. Banks, through this platform, would raise customers’ requests for the dollar, and the platform would request information about the customers requesting the transfer, beneficiaries, and correspondent banks. Through this platform, the funds are tracked until they reach their end destination. On November 4, 2022, the US Federal Bank decided to sanction four Iraqi banks – Al-Ansari Islamic Bank for Investment and Finance, Al-Hadeed Islamic Investment Bank for Investment and Finance, The Asian Islamic Bank for Investment and Finance, the Iraqi Middle East Investment Bank – after the four banks took 40 percent of currency window sales. As a result, the gap between the official exchange rate and the parallel exchange rate in the markets widened due to the imbalance of demand and supply for the dollar. The exchange rate of the dollar rose by more than 15 percent due to the reduction in its supply and the inability of the CBI to satisfy growing demand. The CBI switched from the traditional transfer system (N2-O2) to the electronic transfer system (N2-O2-CO), which is a response to the conditions of international financial transfer conditions imposed by the Society for Worldwide Interbank Financial Telecommunications (SWIFT).

The system by which Iraqi banks submit their requests to the Central Bank of Iraq to transfer specific amounts to correspondent banks in the United Arab Emirates (UAE) or Jordan, ends its monitoring process once the transfers reach their end destination. It lacks oversight at stages, including across the relationship between those banks and Iraqi banks and merchants. Thus, this mechanism facilitates the transfer of suspicious funds or funds derived from money laundering activities.

The adoption of the above-mentioned electronic platform led to reluctance on the part of many banks. A mere 8 and 12 out of 21 banks interacted and responded to the platform, excluding the four punished. Because the adoption of the platform provides complete information to the customs and tax departments about financial transfers and their purpose, many merchants moved away from using bank transfers and resorted to cash purchases to avoid customs tax calculations.

Table 1: Transfers abroad after implementing the electronic platform

DateAmount Transferred (in billions of US $)Number of Banks

Source: Statistical website of the CBI.

Instead of negotiating with the American side to launch sales on foreign trade, the CBI resorted to raising the exchange rate of the dinar against the US dollar, in an unjustified retreat from its previous decision to reduce the value of the Iraqi dinar. These events were accompanied by the arrival of Muhammad Shia Al-Sudani as Prime Minister, who confirmed in November 2022 that the decision to change the exchange rate is within the powers of the Central Bank.

In a televised interview on the official channel Al-Iraqiya, Sudani spoke about “the exaggeration in daily dollar sales, most of which end up abroad in forged bills, which is not offset by the entry of goods and products into the country. All this while the need for actual currency sales is 50 million dollars per day.” However, a year and a half after Al-Sudani’s statement, the Central Bank’s sales amounted to 277,573 million dollars on May 15, 2024. This clearly points to the intended populism of statements which Sudani makes about topics of which he has limited knowledge. Nor does he seem to possess accuracy and realism, as the average monthly dollar sales of the CBI reaching a high of 2,792 billion dollars in 2023.

Table 2: Monthly sales in the currency selling window in 2023 (billions of dollars)

MonthCentral Bank sales in the currency selling window

Source: Statistical website of the CBI.

Changing the exchange rate from 1,450 dinars to 1,300 dinars per dollar impacted the federal general budget in 2023. The estimated revenue from exporting crude oil is calculated based on a price rate of $70 per barrel and an export rate of 3,500,000 barrels per day. This includes 400,000 barrels per day of crude oil produced in the Kurdistan region.

According to Table 2, if the federal general budget had been built on the previous exchange rate of 1,450 dinars to one dollar, then oil revenue would have reached up 130 trillion dinars with total public revenues at 147 trillion dinars, with the resulting total projected deficit at 51 trillion dinars.

However, with oil revenues calculated based on the exchange rate of 1,300 dinars to one dollar in the federal general budget for the fiscal years 2023-2024-2025, we find, also noted in Table 3, that oil revenue was at 117 trillion dinars, and total public revenue reached 134 trillion dinars. This expands the total planned deficit to 64 trillion dinars.

Table 3: Federal general budget for the year 2023 based on the exchange rates 1450 and 1300:

Based on the exchange rate of 1,450 dinars to one dollar
Oil revenues, including exports of petroleum products130,219,125,000
Non-oil revenues17,300,419,036
Total revenue147,519,544,063
Current expenses149,559,959,909
Capital and Investment Expenditures49,350,383,681
Total expenses198,910,343,590
Total planned deficit51,390,799,527
Based on the exchange rate of 1,300 dinars to one dollar
Oil revenues, including exports of petroleum products117,252,500,000
Non-oil revenues17,300,419,063
Total revenue134,552,919,063
Current expenses149,559,959,909
Capital and Investment Expenditures49,350,383,681
Total expenses198,910,343,590
Total planned deficit64,357,424,527

Source: Prepared by the researcher based on; Iraqi Fact Newspaper, Law No. 13 of 2023 “The Federal General Budget of the Republic of Iraq for the Fiscal Years 2023 – 2024 – 2025.”

The impact of changing the exchange rate on the federal budget for the year 2023 can be summarised as follows:

– Oil revenues decreased by 12 trillion dinars, a drop of 9.7%.

– The planned deficit in the federal budget for the year 2023 increased by the amount of decrease in oil revenues, amounting to 12 trillion dinars.

An increase in installment payments and associated interest on external debt of approximately 1.2 trillion dinars.

Containment procedures

The new system required merchants to provide complete and detailed information. As a result, many merchants declined participation to avoid disclosing their transfers and the parties to which they were transferred. They also wanted to avoid tax and customs accounting, which is calculated based on the value of the transfer and not on the profit achieved from trading in imports and resales in the local market. From here, their orders shifted from cash transfers to purchasing the transfer amount from the parallel market and transferring it in cash to the Kurdistan region or neighboring countries. The result was that the exchange rate in the parallel market rose to reach 1,590 dinars per dollar. To close the gap between the official exchange rate and the parallel market exchange rate and achieve stability in the general level of prices, the CBI took several measures:

  • Allowing banks participating in the buying and selling window to hold any amounts in foreign currency and to deposit them with the Central Bank. These deposits would end up in accounts used for external transfers, while paying interest on those balances decided solely by the Central Bank.
  • Facilitating the financing of private sector trade through Iraqi banks and meeting the demand for external transfers by enhancing bank balances with their correspondent banks in other currencies in addition to the US dollar (Chinese Yuan, Euro, UAE dirham, Jordanian dinar, etc.)
  • Facilitating external transfer procedures for merchants via the electronic platform by adopting the commercial list for transfer. They would then allow the merchant to submit shipping documents for imported goods during the following period.
  • Opening outlets to sell foreign currency to the public for travel purposes (medical treatments, Hajj to Mecca, etc.) in accordance with the controls for buying and selling foreign currency. They also had to meet the requests of government banks for the purposes of financing foreign trade, as the dollar would be sold to electronic payment companies for the above purpose at a price of 1,455 dinars to the dollar, instead of 1460 dinars to the dollar.
  • Increasing the US dollar sales ceiling for a traveling citizen or a delegated employee during one month to $500.
  • Increasing the weekly cash sales of exchange companies as follows:
  • Exchange Company A: $1,800,000
  • Exchange Company B: $750,000
  • Exchange Company C: $80,000

To control the decreasing value of the Iraqi dinar and manage the negative impact that would have on people with limited income, the government took several measures. The Central Bank then followed with complementary measures. These measures were as follows:

  • Changing the management of the Central Bank and reappointing Mr. Ali Mohsen Al-Alaq as Governor of the Central Bank. It should be noted that Alaq left the same position at the head of the Central Bank in 2019 after reaching retirement age. His reassignment to the position by the Sudani government is a violation of the Unified Retirement Law no 9 of 2014, which is also applicable to heads of independent bodies. Therefore, Alaq’s return to the position and his enjoyment of privileges and allocations have no legal basis.
  • After Alaq took up his assigned position at the CBI, the dollar exchange rate was reduced, and the value of the US dollar was raised from 1470 dinars to 1300 dinars per dollar.
  • Increasing the maximum amount of cash sales for travel purposes to $7000 per month.
  • Allowing the purchase of dollars for financing personal transfers through agents of money transfer companies, Western Union and Money Gray, at the official rate.

Confused procedures and corruption seizes the opportunity

The measures taken by the CBI to bridge the gap between the official and parallel exchange rates, including setting the maximum sales amount for travel and medical purposes, opened the door to corruption and to the corrupt, on both small and large scales. According to a report by the Federal Office of Financial Supervision, which was produced to match the numbers of Iraqi passengers departing through border crossings (airports) and land ports for Umrah pilgrims (to Mecca) for the period from February 1 to July 8, 2023, to the numbers registered with the CBI according to the electronic platform over the same period. The report tracked an increase in the numbers listed in the electronic platform, amounting to 151,940 travelers. The report also detailed that the total amount spent increased by about $607,760, which indicates that the dollar is being sold at the official price to customers without fulfilling the condition of their travel outside Iraq. This case then is a prime example of speculation in the parallel market to benefit from the price difference.

Table 4: Number of passengers and cash sales in dollars

The number of passengers according to the electronic platform1,481,186
The actual number of travelers through the border crossings1,329,246
The increase in the total number of passengers installed on the electronic platform151,940
Average passenger share (7000 + 3000 + 2000)/ 3$4,000
The estimated total amount of dollars sold to travelers without verifying their travel$607,760

The report of the Federal Office of Financial Supervision revealed that, during the period from February 1 to September 19, 2023, many inaccurate and incomprehensible symbols were included in the passport number field for some travelers’ names. The total amount spent on these names was estimated at 76,850,000 million dollars, at 4,000 dollars per traveler, with 19,145 passengers. This suggests the manipulation of information regarding the names of the passengers and a high possibility that they won’t travel.

Table 5: Number of travelers and manipulated cases

MonthNumber of passengersNumber of cases

The report of the Iraqi Federal Office of Financial Supervision also indicated that, on several occasions, employees of the CBI purchased the dollar twice during the same month, once through the Central Bank outside of the platform, and then again through the cash sales platform. This contrasts with the bank’s official procedures that determine the monthly traveler’s quota, as the number of cases in the sample drawn for audit reached 65.

This is in addition to the fact that the Central Bank does not include cash sales of dollars to its employees in the foreign currency sales database, which indicates that the total number reported for dollars sold in cash is incorrect.

Table 6: Quantities of dollars sold to Central Bank employees

MonthAmount in dollars

This material is published in partnership with the Iraqi Network for Investigative Journalism “NIRIJ”.

Muhammad Hilo

Writer and researcher

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Let’s solve a mystery: On confusion and the exchange rate of the Iraqi dinar  (2024)


How much is $100 US in Iraqi dinar? ›

131,000.00000 IQD

What is the future prediction for Iraqi Dinar? ›

IQD to USD Forecast for the next 5 years

The IQD to USD forecast for the next 5 year indicates that the IQD/USD exchange rate will be $ 0.000607 5 years from now. This would be a -20.50% increase compared to the current rate.

Can I exchange my Iraqi dinar in the United States? ›

Major banks do not offer trade-in Iraqi dinars. IQD is only available for purchase or sale by selected brokers or money exchangers, who may or may not be legally authorized. As mentioned, the brokers or money exchangers typically charge a fee of 30% or more over and above the authorized exchange rate.

Is it wise to invest in Iraqi dinar? ›

Some people are buying the Iraqi Dinar (IQD), the national currency of Iraq, in the hopes of striking it rich. But is the Iraqi Dinar a viable investment, or are these investors simply throwing their money away? Overall, it's a very bad idea to buy the Iraqi Dinar if your goal is to make a profit.

Can I sell my Iraqi Dinar? ›

The best place to sell Iraqi dinars for USD is through a reputable online currency exchange service. These services typically offer the best exchange rates and the most convenient way to sell your currency.

What is the new rate for the Iraqi Dinar? ›

Convert US Dollar to Iraqi Dinar
1 USD1,309.44 IQD
5 USD6,547.19 IQD
10 USD13,094.4 IQD
25 USD32,735.9 IQD
6 more rows

Where is the safest place to buy Iraqi Dinar? ›

US First Exchange provides the most secure platform for you to buy Iraqi Dinar online. We deal in over 20 currencies, including exotic currencies. All packages are insured at full value, and payments are processed the same day.

What is the Iraqi Dinar backed by? ›

The Iraqi money is backed by foreign exchange, treasury notes and precious metals such as gold. Iraq does not maintain a gold standard.

How much is Iraqi Dinar in circulation? ›

Iraq Money Supply M0
143060.00144667.00IQD Billion

Will Iraqi dinar ever increase in value? ›

The value of the Iraqi dinar is fixed by the Iraqi government and does not change, unless the central bank changes the exchange rate.

Can I buy Iraqi dinar at Bank of America? ›

Bank of America, N.A. does not buy or sell Iraqi dinar banknotes or Vietnamese dong banknotes, and currently has no plans to offer this service in the future. You may have read on the internet or heard from friends that Bank of America, N.A. buys and sells these banknotes, or has plans to offer this service.

How much cash can I carry to Iraq? ›

Tourists and travellers going to Iraq and Libya are able to withdraw foreign cash in the form of coins and notes with a daily limit of no more than $5,000 or the equivalent, according to the rules.

Does Wells Fargo buy Iraqi Dinar? ›

No, Wells Fargo does not buy or sell Iraqi dinar, Vietnam dong, or Zimbabwe dollar.

What was the highest value of the Iraqi Dinar in history? ›

The USDIQD increased 0.3958 or 0.03% to 1,310.3958 on Tuesday July 9 from 1,310.0000 in the previous trading session. Historically, the Iraqi Dinar reached an all time high of 1460.00 in December of 2020.

What is the outlook for the Iraqi Dinar? ›

USD to IQD Forecast FAQ

Today, Iraqi Dinar is expected to rise against the US Dollar, as the forecast expects the USD/IQD exchange rate to move to IQD 1,309.06 from the current rate of IQD 1,309.00. In the next 7 days, Iraqi Dinar is predicted to increase compared to the US Dollar by IQD 1,309.80.

How much is $1000 in Iraq? ›

Download Our Currency Converter App
Conversion rates US Dollar / Iraqi Dinar
1000 USD1,310,000.00000 IQD
2000 USD2,620,000.00000 IQD
5000 USD6,550,000.00000 IQD
10000 USD13,100,000.00000 IQD
8 more rows

How much is $500 dollars in Iraqi dinar? ›


How much is $100 US in Iran? ›

Convert US Dollar to Iranian Rial
100 USD4,229,600 IRR
500 USD21,148,000 IRR
1,000 USD42,296,000 IRR
5,000 USD211,480,000 IRR
6 more rows

How much is 1 Iraqi dinar to one US Dollar? ›

0.00076 USD


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