Shafaq News- Baghdad

The Iraqi Contractors Union asked Prime Minister Ali Al-Zaidi to postpone applying the Central Bank of Iraq's new official exchange rate for the dinar, which took effect on Wednesday.

Under the new rate, the bank sells dollars to the public at 1,520 dinars, to banks at 1,510 dinars, and buys dollars from the Finance Ministry at 1,500 dinars. The previous official rate was 1,320 dinars per dollar. Exchange shops in Baghdad and Erbil sold the dollar at 169,000 dinars per $100 on Wednesday morning and bought it at 168,000, according to a Shafaq News market survey, compared with around 160,000 dinars per $100 on Tuesday morning.

In a letter to Al-Zaidi, the union asked the government to delay implementing Cabinet Decision No. 544 of 2026, which set the new rate, citing its financial effect on government contracts and projects. Contracting companies were still dealing with the effects of the previous rate change under Cabinet Decision No. 301 of 2021, the union said, and payments owed to them under that decision had not yet been made.

The new rate will raise the cost of projects, materials, transport and services, reduce profit margins and increase companies' financing needs, according to the letter, affecting both existing contracts and those still under study or awaiting award. The union called for a comprehensive arrangement that accounts for each project's contractual stage.

What Experts And Traders Say

Mahmoud Dagher, a financial expert and former director at the central bank, told Shafaq News that the decision aims to increase the dinar value of the state's dollar revenues, mainly from oil, so the treasury has more funds to pay public-sector salaries.

Economist Mohammed al-Hasani said the change would reduce Iraqis' purchasing power. By his estimate, public employees would lose about 30% of the value of their salaries, while purchasing power for goods could fall by more than 70% once customs duties and transport costs are included. Overall, he said, citizens could lose about half of their monthly income.

The market rate has begun to rise, according to economist Ali Daadoush, who expected the gap between the official and parallel-market rates to widen. He said food prices could increase and suggested the government lower customs duties to limit price rises.

A trader who asked not to be named expected the parallel-market rate to reach 190,000 to 200,000 dinars per $100 because of higher demand for dollars, and said the government should also take steps to manage the parallel market.

Iraq last adjusted the official exchange-rate structure in early 2023, setting the end-user rate at 1,320 dinars per dollar after the 2020 devaluation.