Iraqis Are Going Back To Using The Dollar.

[Luigi1]

Here's some articles of Dinarian interests...

-Iraqis Are Going Back To Using The Dollar.

-Dollar Strengthens In Parallel Markets Creating More Demand.

Treat as rumors.  Not verified.  Your opine.

 

 

 

 

The Rising Dollar Is Testing Banking Reforms: The CBI Is Changing Rules, But The Parallel Market Is Resisting.

ARTICLE:  The USD is still being sold in the Iraqi parallel market at a significant difference from the price announced by the CBI, despite a series of banking & regulatory measures implemented by the authorities during the past months in an attempt to restructure the financial sector & expand official channels for obtaining foreign currency.

 

The selling price of $100 at Baghdad exchange bureaus reached approximately 154,500 Dinars at the close of trading on Saturday, August 29, the same price as at the Al-Kifah and Al-Harithiya exchanges.

 

Meanwhile, the CBI offers the USDr at 1,310 Dinars, equivalent to 131,000 Dinars per $100.  This leaves a difference of approximately 23,500 Dinars, or about 18 percent, between the CBI's rate & the cash selling price in the market.

 

The figures do not reflect a steady upward trend for the Dollar.  The selling price in Baghdad reached about 156,000 Dinars in some sessions in June before it declined, but at the end of August it remained higher than its level at the end of January when it was selling for about 151,000 Dinars per 100 Dollars.

 

This means that the new measures have not yet led to a permanent narrowing of the gap between the two prices to limited levels, despite a major change in the way Iraq manages trade finance & access to foreign currency.

 

Since the beginning of 2025, Iraq has moved from an electronic platform through which the CBI oversaw foreign transfers to a system in which commercial banks rely on their accounts & relationships with correspondent banks abroad, while the CBI finances those accounts & oversees compliance.

 

The IMF said last year that the transition to the new system had succeeded in reducing the gap between the official & parallel ER at that stage, but it also said that further narrowing the gap required facilitating access to foreign currency, tightening customs controls to curb smuggling & informal trade & promoting the use of the Dinar in local transactions.

 

But the widening gap again in 2026 indicates that reforming the transfer mechanism alone was not enough to eliminate demand outside the formal system.

 

The CBI said in June that it was committed to meeting legitimate demand for Dollars & maintaining exchange rate stability & that its reform program included reintegrating Iraqi banks into foreign transfers, expanding their relationships with correspondent banks, improving electronic payments & complying with anti-money laundering & counter-terrorism financing standards.

 

 

In July, CBI Gov Nizar Nasser Hussein announced that, following discussions with the UST Department, an understanding had been reached allowing restricted Iraqi banks to return to foreign correspondent banking channels in  currencies other than the Dollar after they met compliance & governance requirements.

 

The bank said that seven banks have become eligible for this stage & that they can regain eligibility to deal in Dollars later after passing additional requirements.

 

In the same month, the CBI withdrew the licenses of three companies that mediated the buying & selling of foreign currencies, namely Al-Rawajeb, Saba & Al-Nitaq, due to their violation of the sector's regulatory controls.  Then, it held meetings with exchange companies to discuss reorganizing their operations & raising compliance & governance levels.

 

The policy towards cash Dollars also witnessed another change.  In July, Iraqi media published a directive from the CBI, allowing banks to deliver some foreign remittances & incoming Dollar deposits to their owners in the same currency, according to specific controls, in a move that would increase the banking system's ability to meet the legitimate demand for foreign currency.

 

However, the parallel market did not disappear.

 

This is partly due to the nature of demand, which does not all pass through the banking system.  The IMF stated in its report on Iraq that the remaining difference between the two ER reflects, among other factors, informal trade, demand for Dollars for activities that cannot access regulated channels & speculation.

 

The CBI itself, had previously stated in clarifications that part of the parallel demand comes from traders who do not use official import methods, or from trade that does not pass through regular customs ports, or from prohibited activities, which makes providing Dollars for legitimate transactions insufficient on its own to eliminate the informal market.

 

Iraq's financial relationship with the US & its trade with Iran adds another layer of complexity.

 

Reuters reported last week that Iraq's reliance on the Dollar-based financial system gives Washington significant leverage over its financial sector, at a time when Iraq maintains extensive  economic ties with Iran.  According to figures cited by the agency, Iraqi-Iranian trade exceeded $10 billion in 2025.

 

In recent years, the US has also imposed restrictions & sanctions on Iraqi banks that it said were involved in transactions linked to Iran, prompting the CBI to tighten compliance requirements and restructure the relationship of Iraqi banks with the int'l financial system.

 

This reveals a paradox facing Iraqi monetary policy: stricter compliance reduces the risks of sanctions & money laundering & brings banks closer to the int'l financial system, but at the same time it may leave a portion of demand that is unable or unwilling to go through official procedures heading to the parallel market.

 

Therefore, the market rate alone does not provide a complete measure of the success of banking reform.  Restructuring banks, improving governance, expanding their int'l relationships & subjecting remittances to scrutiny are objectives that extend beyond the daily ER.

 

However, a persistent gap approaching 18 percent is at the same time an indicator that is difficult to ignore when measuring the ability of reforms to reach the real economy.

 

For a trader who cannot finance all of his needs through a correspondent bank, or a citizen who needs cash Dollars for purposes other than those specified, the parallel market rate remains the actual rate he faces.

 

Herein lies the most difficult test for the CBI & the government of Ali al-Zaidi.

 

After changing the rules for foreign exchange, reopening banking channels, regulating exchange companies & expanding Dollar transactions through banks, the challenge is no longer limited to building a more compliant financial system, but has become making this system capable of competing with the parallel market in speed, access & cost.

 

The experience of the first eight months of 2026 suggests that the parallel market has not yet given up.

 

The Dollar, which was selling for about 151,000 Dinars per 100 Dollars at the end of January, reached 154,500 Dinars at the end of August, although it fell back from the peaks it recorded in June.

 

Thus, what has been achieved so far seems closer to a reform of the banking structure & channels than to a complete transformation of the exchange market.

 

Narrowing the gap between the two prices, rather than just the number of instructions or banks that have been rehabilitated, will be one of the clearest tests of the new policy’s ability to transfer reform from the banks to the market.

 

 

USD/IQD Flat In Baghdad, Rises In Erbil.

ARTICLE:  The USD closed Tuesday’s trading steady in Baghdad but higher in Erbil, with exchange rates hovering above 154,100 Dinars per 100 Dollars.

 

According to a Shafaq  News market survey, the dollar traded in Baghdad's Al-Kifah and Al-Harithiya exchanges at 154,250 Dinars per 100 Dollars, unchanged from the morning session.

 

In the Iraqi capital, exchange shops sold the Dollar at 154,750 Dinars per 100 Dollars & bought it at 153,750 Dinars, while in Erbil, selling prices stood at 154,200 Dinars & buying prices at 154,150 Dinars.

 

[Luigi1]

Luigi's two cents worth:

Iraqis are going back to using the USD...not good.

It's not so much lack of confidence in the Dinar as it is about turning a quick profit.

Iraqis may be going back to money laundering the USD to Iran.

Iran is paying top Dollar for the USD.

This may explain the gap between the offical CBI & the parallel rate.

CBI is doing everything humanly possible to comply to UST demands.

It's now in the hands of the money traffickers & is about to get worse.

There is still an underground USD money laundering market funnelling USD to Iran.

This is war & the Iraqi citizens are eager to take the risks as the Iraqi economy worsens.

Can't blame them...a fast Buck is a fast Buck when times are tough.

Going Digital Dinar & the RI will solve the money laundering issue.

It will be so easier to track illegal transactions by leaving e-tracers on the digital flows.

This is just one of many issues Iraq can immediately solve by a simply Digital Dinar RV-RI.   IMHO.   Go RV.

[Luigi1]

Here's another article related to the above...Iraq is cashing in on high oil prices as it uses pipelines to offset Strait loses...

 

 

 

Oil Prices Climb Above $91 On Renewed US-Iran Strikes.

ARTICLE:  Oil prices gained around $1 on Tuesday as the resumption of fighting between the US & Iran in the Middle East renewed fears of supply disruptions from the world's key crude-producing region.

 

Brent crude futures were up $1.05, or 1.2%, to $91.54 a barrel at 0455 GMT, while U.S. West Texas Intermediate crude was up $1.27, or 1.5%, to $87.03.

 

In the previous session, Brent closed up 2.7%, at one point reaching its highest since August 25, and WTI settled up 2.8%, touching its highest since August 21.

 

On Monday, US President Donald Trump threatened further strikes against Iran following the first exchange of direct ⁠attacks between the countries in a month on Sunday, raising tensions in a conflict that had recently shifted into an economic standoff.

 

"These bring the potential for Iranian retaliation back into the equation.  That in turn raises the prospect of damage to energy infrastructure around the Gulf & adds fresh uncertainty for shipping through the Strait of Hormuz.  Both of those risks are being reflected in the firmer tone in crude prices," said Tim Waterer, chief market analyst at KCM.

 

On Monday, the number of visible commodity vessels transiting the Strait of Hormuz held at five per day, below the 10-day average of around 14, shipping data from Kpler showed.  None of the five ships were liquid tankers.

 

Efforts by mediators including Qatar and Oman to broker a ⁠deal to reopen the Strait of Hormuz, which carried about a fifth of global oil supplies before the war erupted in late February, have so far failed to gain traction.

 

Iran shut the waterway after the US & Israel attacked the country on February 28.

[Luigi1]

Here's another article related to the above...Oh what to do: to borrow or to remove the zeros...

 

 

 

Between External Borrowing & Removing Zeros: The Government Faces Difficult Choices To Address The Financial Crisis.

ARTICLE:  As pressure mounts on Iraq's public finances, a range of options for addressing the liquidity crisis are resurfacing.  These include resorting to external borrowing & restructuring the local  currency.

 

Parliamentary sources confirm that the project to remove zeros from the currency has not yet entered the implementation phase, while economists discuss the possibility of securing a substantial external loan to provide liquidity & bolster reserves.

 

This comes amidst ongoing challenges related to public spending and the heavy reliance on oil revenues, meaning any decline in oil prices or revenues quickly impacts the state's ability to finance its expenditures and obligations.

 

External Borrowing: The Fastest Solution?

Economic expert Abdul Rahman Al-Mashhadani believes that the government's move towards external borrowing from int'l banks represents one of the quickest available solutions to address the liquidity shortage & overcome current financial pressures. 

 

Al-Mashhadani told Al-Maalouma that external loans offer Iraq grace periods of several years before repayments of installments & interest begin. 

 

This provides the government with time to secure repayment resources without creating immediate pressure on public spending. 

 

He also believes that resorting to borrowing can contribute to replenishing the central bank's reserves, especially given the depletion of some of them due to market financing requirements & government spending.

 

Al-Mashhadani suggests that Iraq could request a loan of up to $20 billion, arguing that the current debt level, compared to the size of the economy & oil revenues, gives the country room to maneuver in int'l borrowing markets. 

 

But does borrowing address the root of the problem?

 

While borrowing may provide a quick fix for the liquidity problem, resorting to it does not represent a final solution to the structural imbalances in the Iraqi economy, as loans remain financial obligations that the state will need to repay in the future.

 

This means that the success of borrowing in alleviating the crisis depends on how the funds are used and whether they are directed towards supporting financial stability, financing productive projects & reducing imbalances, rather than being used to cover recurring expenses without addressing the sources of the deficit.

 

Furthermore, continued reliance on oil as the primary source of revenue leaves Iraqi finances vulnerable to the fluctuations of global markets, making fiscal reform & diversification of income sources essential alongside any temporary financing solutions.

 

Removing zeros... an old project resurfaces.

 

The project to remove zeros from the Iraqi Dinar has resurfaced following reports about the possibility of issuing a new currency in early 2027.

 

However, MP Murtadha Afwin confirmed to Al-Maalomah that the project has not yet moved to the implementation phase, stressing that removing zeros does not in itself represent a solution to the  economic crises plaguing Iraq.

 

This stance highlights the need to distinguish between restructuring currency denominations & raising the real value of the currency.  Removing zeros, if implemented, primarily aims to simplify monetary transactions and reduce the volume of circulating currency.

 

It does not automatically increase the purchasing power of the dinar or address inflation & the Budget deficit.

 

The project to remove zeros has been under discussion in Iraq for years & the CBI has previously addressed it as part of plans to restructure the currency & facilitate monetary transactions.

 

Official positions vary & an important point emerges here: discussing the removal of zeros or external borrowing does not necessarily imply a final government decision on these matters.

 

The Iraqi government has recently confirmed that there are no official plans to change the currency or remove three zeros & it has denied any intention to borrow externally.

 

 It described the financial situation as a temporary liquidity crisis, not a structural financial crisis.

 

Conversely, political and economic statements continue to raise the issues of borrowing & removing zeros within the public debate on how to address financial pressures, reflecting the extent of the debate surrounding the options the state might adopt in the coming period.

 

The liquidity crisis requires broader solutions.

 

Between the option of external borrowing and the project to remove zeros from the currency, a genuine solution to the financial crisis seems linked to reforms that go beyond monetary measures alone. 

 

These reforms include controlling public spending, boosting non-oil revenues, revitalizing the private sector, reviewing government expenditures, and addressing areas of waste & corruption.

 

 

[Luigi1]

Here's another article related to the above...inflation returns to Iraq after CBI Denies it, then prints more money to pay salaries...Iraq enjoyed the lowest inflation rates on earth prior to the US-Israel-Iran War...Iraqis wipe out their savings to pay for inflation...

 

 

 

Living Costs Squeeze Savings For Iraqi Households.

ARTICLE:  For many salaried Iraqis and retirees, a month's pay is largely spent the moment it arrives, leaving little room for savings or investment as rent, utilities, food & transportation take a growing share of household income.

 

Abu Ahmed, a Baghdad resident, said his salary is "gone as soon as I receive it," with rent, bills, food & transportation taking priority before any money can be set aside.  What remains, he said, is too little to save in any meaningful way.

 

The timing of salary payments adds to the strain.  Hassan Hadi, another Baghdad resident, said household expenses continue regardless of whether salaries arrive on schedule, with school fees, clothing, private generators, food & transportation consuming much of his income.

 

What The Essentials Cost:

The pressure is reflected in the cost of basic goods & services.  Regular gasoline is priced nationally at 450 Dinars per liter, about $0.35, under decisions issued by the Council of Ministers.

 

Many Baghdad households also rely on neighborhood generators during outages in the national grid. 

 

The Baghdad Provincial Council sets monthly generator rates; in June 2026, it priced an ampere at 12,000 Dinars ($9) for round-the-clock service, 8,000 dinars ($6) for night-only supply & 6,000 dinars ($4.60) in privatized areas linked to the nat'l grid.

 

Against those costs, Iraq's statutory minimum wage has remained at 350,000 Dinars a month, about $269, since a 2017 cabinet decision.  That is about 30% below the roughly 500,000 Dinars ($385) that labor unions cite as an estimated monthly poverty line.

 

Education can add substantially to household expenses.  Annual fees at Iraq's private colleges range from about 1.2 million to 8 million Dinars ($920 to $6,150), rising above 10 million Dinars ($7,690) for some medical & dental programs, according to government figures.

 

A Low Rate Of Saving:

Mudhhir Mohammed Salih, financial adviser to the prime minister, told Shafaq  News that Iraq's gross nat'l savings average 12% to 15% of GDP, with the rate fluctuating according to oil prices, income, consumption & investment.

 

Using a measure focused on individuals rather than nat'l savings, economist Hilal al-Taan said about 9.7% of Iraqis saved money in 2024, well below the global average.  He attributed the low rate to limited incomes, high spending on food & housing, weak confidence in banks & rising living costs.

 

Inflation & The Shrinking Dinar.

Najm Abdul-Tarish, an academic at the University of Dhi Qar, said much of a household's income goes toward housing, education & healthcare, while inflation erodes the Dinar's purchasing power. In practical terms, the money in a worker's pocket buys less even when its face value remains unchanged.

 

"Higher inflation can therefore erode savings while raising household expenses, putting additional pressure on both saving & investment," Abdul-Tarish told Shafaq News.

 

Exchange-rate pressures add another dimension. While the CBI sets the official rate at 1,300 Dinars to the Dollar, the currency has traded weaker on the parallel market. 

 

In May 2026, $100 sold for about 153,750 Dinars in Baghdad, equivalent to roughly 1,538 Dinars to the Dollar, according to exchange-shop data.

 

Cash Outside The Banks:

Salih said a large amount of cash circulates outside Iraq's banking system, although he cautioned that money held outside banks should not be treated entirely as savings because much of it is used for everyday purchases, trade & other transactions.

 

Moving a larger share through banks could strengthen their capacity to finance  economic activity, he said.

 

"A larger share of savings moving through banks would strengthen their ability to mobilize domestic resources for lending and investment," Salih said, pointing to the need for better banking services, greater public confidence in financial institutions & wider use of electronic payments.

 

CBI figures illustrate the challenge.  Total deposits at operating banks fell from 133.50 trillion Dinars ($102.7 billion) in 2023 to 122.88 trillion Dinars ($94.5 billion) in 2024.

 

Over the same period, bank credit increased from 95.66 trillion Dinars ($73.6 billion) to 102.24 trillion Dinars ($78.6 billion), increasing the importance of attracting deposits to support lending.

 

Economist Dhergham Mohammed Ali linked weak savings to the limited use of banks, calling for wider adoption of electronic payments & more point-of-sale terminals & cash facilities across retail businesses & transportation.

 

By the CBI's latest reading,  currency in circulation totaled 111.189 trillion Dinars ($85.5 billion), of which 101.966 trillion Dinars ($78.4 billion) circulated outside the banking system — about 91.7% of the total.

 

That does not mean the money represents untapped household savings; much of it finances everyday transactions.

 

But the scale highlights the challenge facing Iraq's banking sector: drawing more economic activity into formal financial channels while many households have increasingly little income left to save.

[rvmydinar]

5 hours ago, Luigi1 said:

 

Iraqis are going back to using the USD...not good.

Then, what is going to happen with " delete three zeros's process " that they have been talking about it much lately? More Delays again for unlimited period of time??

[Luigi1]

31 minutes ago, rvmydinar said:

Then, what is going to happen with " delete three zeros's process " that they have been talking about it much lately? More Delays again for unlimited period of time??

 

To add misery to insult...CBI is printing more of the highrer Dinar notes, then denying, to pay wages while adding to inflation worries.   

 

You can't print yourself out of this mess.   Ask the UST.  Go RV.

[BETTYBOOP]

At those prices in Iraq we would all be rich. If they had to come live in the west, they would have a hairy canary  at the cost of living!!

[BETTYBOOP]

I wish our biggest concern was gas @ $0.35. Jjjeeezzz  these goons don't know they are born!

[screwball]

3 hours ago, Luigi1 said:

To add misery to insult...CBI is printing more of the highrer Dinar notes

have to printto replace those taken out of circulation due to damage and wear....

[screwball]

they cant have USD in country and be on the forex...the dinar has to be used in country and for this requires purchasing power and change in rate 

[Dretown39]

14 minutes ago, screwball said:

they cant have USD in country and be on the forex...the dinar has to be used in country and for this requires purchasing power and change in rate 

Yes it's been stated their only using Dinar and the citizens been using their currency for a while now.

[Luigi1]

1 hour ago, screwball said:

they cant have USD in country and be on the forex...the dinar has to be used in country and for this requires purchasing power and change in rate 

 

Agree.  All the USD is used for is to turn a fast profit via money laundering.

Can't blame the citizens. Times are tough.  Got to make ends meet somehow.  Go RV.