The dinar is under test during crises... Will the central bank succeed in protecting the market from economic storms?

[RJG]

economy Today, 11:28 | 687

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The dinar is under test during crises... Will the central bank succeed in protecting the market from economic storms?

 

Baghdad Today - Baghdad

Economic and financial affairs expert Nasser Al-Tamimi confirmed on Sunday (May 24, 2026) that the ability of the Central Bank of Iraq to stabilize the exchange rate of the dinar is directly linked to the size of foreign reserves and the efficiency of monetary policy management.

Al-Tamimi told Baghdad Today that the Central Bank currently has effective tools to contain pressures on the market, most notably managing the currency sale window, regulating foreign transfers, and direct intervention through cash reserves.

Countering market pressures with monetary tools

He explained that “the stability of the exchange rate does not depend solely on financial abundance, but also on the ability of the central bank to achieve a balance between the local demand for the dollar and the size of its supply, in addition to strengthening confidence in the banking sector and regulatory procedures.”

He noted that “the current foreign reserves give the central bank a good margin for maneuver in the face of any future pressures,” but stressed at the same time that the continuation of this stability remains linked to the state’s ability to control public spending and diversify sources of revenue away from near-total dependence on oil.

Why is the government insisting on not devaluing the dinar?

Al-Tamimi added that “the government’s and monetary insistence on not reducing the value of the dinar has important economic and social dimensions, as it contributes to reducing inflation waves and preserves the purchasing power of citizens, especially with the Iraqi market’s extensive reliance on imported goods.”

He noted that this approach “may help to calm public fears in the short term, but it may open the door to speculation if it is not accompanied by clear economic messages and financial reforms that enhance market confidence.”

A message of reassurance to investors and markets

He stressed that “the decision to fix the exchange rate sends reassuring messages to investors and foreign companies that Iraq is striving to maintain a stable and predictable monetary environment,” noting that “the international community usually views currency stability as an indicator of a country’s ability to manage financial and monetary balances, which is reflected positively in its credit rating and the confidence of international institutions.”

Ongoing threats to the Iraqi economy

Regarding external factors, Al-Tamimi explained that “the Iraqi economy remains highly sensitive to fluctuations in oil prices, as it is the main source of public revenues,” warning that “any sharp and continuous decline in global oil prices could put pressure on both public finances and the exchange rate.”

He also noted that “regional tensions and turmoil in global markets could affect dollar flows and trade,” stressing the need for monetary and financial authorities to maintain comfortable levels of foreign reserves, while adopting proactive policies to avoid any future pressures that might lead to a devaluation of the dinar.

The Iraqi economy relies mainly on oil revenues, which constitute the largest share of the general budget, making the stability of the exchange rate closely linked to global oil prices and the level of foreign reserves at the central bank.

Observers believe that any regional disturbances or a decrease in oil revenues directly affect local markets, given Iraq’s heavy reliance on imports to secure food, goods, and basic commodities, which makes the stability of the dinar a sensitive economic and social issue that directly affects the lives of citizens.

https://baghdadtoday.news/299898-.html

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7 hours ago, RJG said:

Why is the government insisting on not devaluing the dinar?

Al-Tamimi added that “the government’s and monetary insistence on not reducing the value of the dinar has important economic and social dimensions, as it contributes to reducing inflation waves and preserves the purchasing power of citizens, especially with the Iraqi market’s extensive reliance on imported goods.”

He noted that this approach “may help to calm public fears in the short term, but it may open the door to speculation if it is not accompanied by clear economic messages and financial reforms that enhance market confidence.”

new rate, only way! dinar has to be currency in country and only way to do this is to preserve purchasing power

[lmb4321]

September 2026