In anticipation of Iraq PM Sudani's visit to Washington
The value of the dinar against the dollar increases
NEWSROOM— The upcoming official visit of Iraqi Prime Minister Mohammed Shia Al-Sudani to Washington on April 15 has stirred activity in the Iraqi currency market, resulting in a decline in the value of the U.S. dollar against the Iraqi dinar.
Prior to March 18, the exchange rate of the dollar in the Iraqi market stood above 150,000 dinars. However, following the announcement of Sudani’s visit, the dollar gradually decreased to the 140,000s range.
On March 18, the exchange rate dropped to 149,600 dinars for $100, further declining to 148,000 dinars, and eventually reaching 146,650 dinars by Monday.
Since March 14, the Central Bank of Iraq (CBI)’s dollar sales have shown a notable increase, rising from less than $220 million to $235 million on that day, continuously climbing to $245 million by March 19, and reaching nearly $250 million today. This reflects a more than 13% increase in the Central Bank’s dollar sales, while the dollar’s value has simultaneously decreased by 3% over the past two weeks.
In 2021, the CBI raised the exchange rate to $1 to 1,450 dinars from 1,182. However, it subsequently decreased it back to 1,300 dinars in 2023.
The anticipation surrounding Sudani’s upcoming visit to Washington has influenced the dynamics of the dinar and dollar market. With discussions expected to focus on economic issues with senior US officials, including the impact of the U.S. Treasury on Iraqi banks and Iraq’s debts, the market has responded with fluctuations in the dollar’s value.
A significant reason for the dollar’s depreciation, associated with Sudani’s visit, is the changing perception among Iraqis regarding the U.S.’s support for Sudani’s management of Iraq’s economy, particularly in curbing dollar smuggling.
Initial doubts about America’s backing for Sudani have given way to shifting perceptions as his visit approaches. The market also reflects an oversupply of dollars, as many individuals are converting their dollars to dinars in anticipation of Sudani’s visit, potentially resolving high exchange rates.
Additionally, changes in money transfer fees from Turkey to Iraq have contributed to the dollar’s decline. Previously, transferring $10,000 from the Kurdistan Region to Turkey incurred a $400 fee, but now, not only is there no fee for such transfers, but individuals also receive an additional $53 for every $10,000 transferred. This suggests a significant return of dollars previously smuggled out of the country, particularly to Turkey and Iran.
Forecasts suggest that by April 15, and Sudani’s visit to the United States, the exchange rate of $100 could fluctuate between 145,000 to 148,000 dinars. The outcomes of the meetings between Baghdad and Washington will play a crucial role in determining the future exchange rates of the dollar against the dinar.
