Shafaq News

For Iraqi trader Saleh Salam, a single government decision came with a staggering price tag. He lost 300 million dinars (about $197,400) in just one day after Iraq devalued its currency, as importers face a new financial reality in which securing dollars through official banks can come at extra costs.

Iraq raised the official dollar selling rate for the public from 1,320 to 1,520 dinars on October 7. Prime Minister Ali Al-Zaidi defended the adjustment as a response to mounting fiscal pressures and said speculators had benefited from the previous exchange-rate gap, but traders interviewed by Shafaq News argued that the decision had increased their costs without resolving difficulties in obtaining dollars through official banks.

Higher Costs and Banking Delays

Trader Ali Al-Uqayli said that buying $100 through a bank costs 152,000 dinars at the new rate, but an additional 12,000 dinars (about $7.90), which he attributed to government requirements, brings the effective cost to 164,000 dinars per $100.

Bank transfers could take three days or longer, exposing traders to additional costs, while the Dubai market charges $400 for each day of delay, he said, reporting an additional burden of 12 million dinars (around $7,895) per kilogram of gold.

Al-Uqayli accused the government of failing to support traders and importers, arguing that the additional costs and transfer delays encouraged businesses to obtain dollars through the parallel market. He warned that greater demand outside official banking channels could push the dollar higher and benefit currency speculators.

Disputed Transfers and Financial Losses

The devaluation also triggered a dispute over payments arranged before the exchange-rate change.

Importers and gold company owners protested outside the Central Bank of Iraq (CBI) in Baghdad over demands for additional payments on transfers that had received preliminary approval at the previous rate of 132,000 dinars per $100. They warned that applying the new rate to earlier transactions could expose businesses to substantial financial losses and called for government intervention.

The CBI had clarified on October 10 that traders should not bear exchange-rate differences on transfers purchased and covered at the previous rate before October 7, adding that it had provided financial institutions with funds for eligible transfers and urging traders facing additional charges or unjustified delays to file complaints through its official platform.

Salam told Shafaq News that the CBI had previously required traders and gold companies to provide additional funds at the new exchange rate. He said those demands stopped after the protest but argued that ending them was insufficient to protect businesses from losses caused by the sudden adjustment.

Some traders and importers had suffered losses worth “hundreds of millions of dinars,” he said, warning that abrupt government decisions could disrupt businesses supplying food and other goods to Iraqi markets.

Read more: Why Iraq's dinar keeps sliding despite fresh US cash

Fiscal Relief, Economic Risks

The devaluation came as Iraq faced mounting pressure on its oil-dependent finances. Finance Ministry figures showed oil revenues falling 53% year-on-year during the first seven months of 2026, contributing to a 45.7% decline in total federal revenue.

Addressing parliament on October 8, Al-Zaidi said disruptions to oil exports had strained government finances, leaving his administration facing alternatives including compulsory savings, paying salaries every 45 days, or further borrowing.

The CBI defended the adjustment as a response to pressure on foreign reserves. On October 13, its director general of statistics and research, Samir Fakhri Nima, said Iraq retained sufficient reserves to cover at least a year of imports despite the oil revenue shock.

Meanwhile, academic Abdul Razzaq Al-Bahadli told Shafaq News that the devaluation primarily aimed to offset the budget deficit by generating more dinars from oil revenues earned in dollars. The additional local-currency revenue will “help” finance government operations and public-sector salaries but he described the measure as temporary fiscal relief rather than sustainable economic growth.

The weaker dinar, Al-Bahadli cautioned, would reduce the purchasing power of public- and private-sector employees, leading consumers to limit or postpone purchases as prices rise. Lower demand could also slow commercial activity and force producers, factories, and businesses to cut jobs, increasing unemployment and creating wider economic and social pressures.

Shafaq News market checks on October 8 further recorded price increases of up to 15.4% for selected food staples. The government subsequently exempted imported food and medicines from customs duties and reopened imports of potatoes, tomatoes, and onions to ease pressure on household costs.

Written and edited by Shafaq News staff.