Dollar climbs above 170,000 dinars in Iraq’s currency markets

BAGHDAD — The dollar sold for more than 170,000 dinars per $100 in Baghdad, Erbil and Basra on Sunday morning, about 12% above the Central Bank of Iraq’s official rate.

Exchange shops in Baghdad sold $100 for 170,250 dinars, up 750 from Saturday, and bought it for 169,500. In Basra, shops also sold $100 for 170,250 and bought it for 169,750. Erbil shops sold it for 170,200 and bought it for 169,900.

The official rate is 152,000 dinars per $100, or 1,520 per dollar. A week earlier, on Nov. 8, Baghdad shops sold $100 for 169,000.

Prime Minister Ali al-Zaidi said in an interview with Al-Iraqiya TV on Oct. 23 that Washington would send $1 billion in cash to Iraq and that the parallel rate would soon fall to 155,000 dinars per $100. The dollar eased the next day, to 169,000 in all three cities, but has since climbed again.

Government spokesperson Haider al-Aboudi had said on Oct. 14 that the government and the Central Bank had a plan to bring the rate down to 155,000 in the near term, backed by enough foreign currency reserves. He did not say how the plan would work.

Economist Nabil al-Marsoumi warned on Oct. 19 that the dollar could rise above 170,000 because Iraq’s trade with Iran cannot be financed through banks, so demand for dollars outside the official system stays strong.

Kaifi Khoshnaw, the spokesperson for Erbil’s dollar market, told 964media on Wednesday that a shortage of dollars was pushing the price up. He said the Nov. 8 attack on the Khor Mor gas field in Sulaymaniyah governorate had added 500 to 600 dinars to the price of $100, and he also blamed the budget deficit and the closure of the Strait of Hormuz.

The Central Bank on Tuesday warned banks and electronic payment companies against adding unjustified fees to dollar sales.

“As long as there are borders that are not fully controlled and foreign trade taking place outside official channels, this will be reflected in a difference between the official rate and the market rate,” said Mahmoud Dagher, an adviser to the Central Bank governor and the bank’s spokesperson, in an interview with Al-Rabiaa TV.

On Sunday, the Central Bank said it was still meeting banks’ requests for dollars so importers can pay for goods and services at the official rate, and that transfers approved before Oct. 7 would still be covered.

The Central Bank devalued the dinar on Oct. 7, raising the official public rate from 1,320 to 1,520 dinars per dollar and making the dollar about 15% more expensive at the official rate. It cited economic and financial conditions and said its foreign reserves were sufficient. Baghdad shops sold $100 for 170,000 dinars that day, up from 160,500 the day before.