Devaluation decision from Iraq

Iraq devalued its currency by about 15 percent, raising the official dollar rate from about 1,300 dinars to 1,500 dinars. The decision came at a time when the pressure on the economy caused by war in the country and transportation disruptions in the Strait of Hormuz increased.

The Central Bank of Iraq announced that the new exchange rate was determined at the Council of Ministers meeting the night before in order to "meet the relevant fiscal, economic and monetary requirements".

The previous official exchange rate in Iraq was set in 2023. However, there has been a difference between the official rate and the market rate applied in foreign exchange offices for a long time.

This gap has widened in recent months due to the US-Iran war and the war's occasional spread to Iraq, as well as the disruptions in maritime transport in the Strait of Hormuz.

Iraq's economy is largely based on oil exports. A significant part of the country's oil exports were carried out through the Strait of Hormuz before the war.

After the start of the war, Iraq turned to land transportation via Syria to export its oil. However, the fact that this route was more costly and less efficient increased the pressure on the economy.

Before the official devaluation decision, the dollar exchange rate in the free market had exceeded 1,600 dinars. After the announcement of the new official rate, the market rate also increased to over 1,700 dinars.