Iraqi parliament to 'devalue dollar-dinar exchange rate' to control rising prices

Iraqi parliament to 'devalue dollar-dinar exchange rate' to control rising prices
Devaluation of the US dollar exchange rate appears to be popular among Iraq's public, however Iraqi authorities are not for the move yet.
3 min read
04 November, 2022
An Iraqi man counts Iraqi Dinars as he exchanges them for US Dollars at his money exchange office in central Baghdad, 12 December 2007, {Getty}.

Iraqi politicians and lawmakers are attempting to push the country's central bank to raise the value of the national currency against the US dollar in a bid to curb the rising prices.  

Iraq's central bank in December 2020 devalued the dinar, setting the exchange rate at 1,460 dinars per dollar amid an economic crisis caused by low oil prices and the Covid-19 crisis. Previously, the dollar was traded at 1,182 Iraqi dinars.

The impact on Iraq's import-reliant market was a rise in prices across the board, particularly for food items.

State of Law Coalition head and former Prime Minister Nouri Al Maliki suggested on Wednesday in a tweet that the exchange rate of dinar-dollar be set at 1,375.

"Devaluation of the national currency and not dealing with its consequences on the citizens, have created a hard economic and living crisis…today the Iraqi government should resolve this issue according to a complete and contemplated plan in a way that neither Iraqi citizens nor the national economy is negatively affected," Maliki said.

Prime Minister Mohammed Shia al-Sudani said on the same day in a Baghdad press conference that although he agrees with raising the issue, only Iraq's Central Bank has the power to alter the value of the national currency. 

"The finance committee is not for such a move, but there are efforts for collecting signatures by the MPs so that the parliament can change the dinar-dollar exchange rate," Jamal Kochar, a Kurdish MP from the Kurdistan Islamic Union (KIU) and a member of the parliament's finance committee told The New Arab.

"Iraq's PM has not indicated this issue in his government agenda."

Iraq's finance minister has also stated that the dinar value will not be changed in the country's 2023 budget bill, another indication that there will be no change in the dinar-dollar exchange rate.

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If the value of the dinar is raised, then it will lower the prices of commodities, he said. 

"However, it would create a burden upon the Iraqi government, since in the devaluation of the national currency the government has added 23 trillion Iraqi dinars to its coffers," he said.

The New Arab spoke with Iraqi citizens who expressed support for changing the exchange rate.

"If Iraq’s Central Bank devalued the dollar in exchanging it with dinar permanently, it would be in the interests of people and prices of commodities would lower gradually," Bakhtyar Ahmed, a Sulaimaniyah money exchanger told TNA

Hawbir Mohammed, a grocery shop worker in the same city said such a change would "increase the purchasing capacity of people".

Iraq, the second-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), sits on enormous oil reserves. Revenues from the sector feed 90 percent of the federal government budget.

However, people lack basic services, and suffer from high prices and unemployment rates.