Iraq's exchange rate gap expected to widen further

Shafaq News / Economic experts in Iraq predict that the gap between the official and parallel exchange rates will widen in the coming days or weeks, with expectations that the dollar exchange rate will reach 160,000 dinars during this period.

Economic expert Nabil Al-Marsoumi stated, "It is expected that the gap between the official and parallel rates will increase in the coming days or weeks, especially after the release of funds in the 2023 budget and increased consumption and investment spending."

He explained that "previous conditions remain the same, meaning that as long as there are U.S. sanctions on Iran preventing official financial transfers through bank transfers to settle Iranian trade dues, the gap will remain large and widen with time."

Regarding Iranian exports to Iraq, Al-Marsoumi said, "Iranian exports to Iraq exceed $10 billion annually, and these are currently being financed from the parallel market, by collecting dollars from travelers and transferring them to Iran."

He added, "Iraqi travelers abroad spend $3.41 billion annually, and these individuals are prohibited from obtaining dollars at the official rate, so they resort to the parallel market."

Al-Marsoumi pointed out, "the current factors in Iraq indicate that the gap will increase, and no one would be surprised if the dollar exchange rate reaches 160,000 dinars in the coming weeks or months."

He concluded by saying, "Relying on measures by the Central Bank or the Iraqi government to narrow the gap is difficult to implement because the issue involves capabilities that neither the Iraqi government nor the Central Bank possess."

"The only solution to narrow the gap between the two rates is to lift U.S. sanctions on Iran, restore official transfers to Iran, or cut off foreign trade and prevent Iraqi travelers from traveling to Iran. Otherwise, the gap will continue to widen in the near and medium term."

The exchange rate for the Iraqi dinar against the U.S. dollar touched 156,000 dinars for every 100 dollars with the closing of the central stock exchange in Baghdad on Thursday.