Shafaq News- Baghdad

Prices of goods in Iraq could decline if the dollar stabilizes between 1,600 and 1,630 dinars, an Iraqi economist told Shafaq News on Saturday, after the dollar fell to around 1,630 dinars in the local market.

Nabil Al-Marsoumi said the decline could have a positive effect on local prices, noting that traders had priced many goods at around 1,600 dinars to the dollar even before the exchange-rate adjustment.

Manar Al-Obaidi, head of the Iraq Future Foundation for Economic Studies and Consultations, cautioned against drawing early conclusions about the impact of the government’s decision. He cited Iraq’s 2021 experience, when the official dollar rate rose from 1,190 to 1,460 dinars —a 22.7% increase— while food prices rose by about 5% during the year, according to World Bank figures. Al-Obaidi said the figures show that changes in the exchange rate do not necessarily translate into equivalent increases across all goods.

Al-Obaidi called for monitoring prices over the coming weeks and reviewing inflation data over the next several months before assessing the impact on purchasing power and household finances.

He attributed some of the criticism of the decision to a lack of clear communication about its economic objectives and expected results, adding that speculation before the announcement had already heightened public concern.

Read more: Source: Iraqi leaders backed dollar hike before announcement

Prime Minister Ali Al-Zaidi addressed parliament over the exchange-rate decision. He said the government had faced three alternatives: compulsory savings that would leave employees waiting for future payment, paying salaries every 45 days or borrowing more despite the country’s existing debt burden.

The cabinet approved the exchange-rate adjustment following an emergency recommendation from the finance minister and the Central Bank governor. Under the new rates, the dollar is priced at 1,500 dinars for purchases from the Finance Ministry, 1,510 for banks and 1,520 for the public.

Read more: Iraqi dinar devaluation sparks backlash from blocs inside the cabinet