Home / Business and Economy / Iraq Devalues Dinar Again, Sparking Outcry
Iraq Devalues Dinar Again, Sparking Outcry
8 Oct
Summary
- Iraq's currency was devalued, reversing prior strengthening efforts.
- The nation faces massive budget deficits due to war-related oil revenue loss.
- Lawmakers are demanding the government reverse the decision due to rising costs.
Iraq's government devalued the national currency on Tuesday, reversing a previous decision to strengthen the Iraqi dinar. This move, approved by the cabinet following a recommendation from the Finance Minister and the Central Bank of Iraq (CBI) governor, sees banks selling dollars at 1,520 dinars, a 200-dinar increase.
The devaluation coincides with the adoption of Iraq's 2027 budget, which forecasts a deficit exceeding 40 trillion dinars ($30 billion). This shortfall is largely attributed to the US war on Iran, which has severely disrupted shipping through the Strait of Hormuz and significantly reduced Iraq's oil exports, leading to an estimated $60 billion loss in oil revenue.
Many Iraqi MPs have voiced strong opposition, arguing the devaluation will increase the cost of living for citizens already facing economic challenges. They have called for the decision to be reversed, with some criticizing the lack of prior consultation with parliament. The finance minister and central bank governor are scheduled to appear before parliament to discuss the matter.
This is not the first time Iraq has devalued its currency. In December 2020, the dinar was devalued to 1,450 per dollar due to a crash in oil prices. More recently, in January 2023, the dinar weakened amid US curbs on dollar flows, prompting a change in the central bank governor and a subsequent strengthening of the dinar.
