Iraq took the decision to amend the US dollar to the Iraqi dinar exchange rate. The Iraqi Central Bank changed the currency rate from 1,460 dinars to 1,300 dinars. According to a statement from the office of Iraqi Prime Minister Mohammed Shia al-Sudani, the decision was accepted by the Council of Ministers.
Read more: Food security concerns push Iraq to open the door for imports for 3 months
According to the official Iraqi News Agency, Central Bank Governor Ali Mohsen Al-Alaq stated that the choice was made “to lessen the burden of civilians.”
Up until the end of 2020, Iraq’s official dollar-to-dinar exchange rate was set at around 1,200 dinars to the dollar. Then, due to a liquidity problem, Iraq reduced the rate to 1,460 and decreased oil prices. Iraq’s economy is reliant on oil sales. Devaluing a currency can occasionally increase exports and lower local debt loads.
Following a weeks-long fall of the Iraqi dinar, al-Sudani dismissed Mustafa Ghaleb Mukheef as governor of the central bank and replaced him with Muhsen al-Allaq, a previous governor. The decision was made by al-Sudani in response to Mukheef’s desire to resign after the dinar hit fresh lows of roughly 1,670 to the US dollar.
The Federal Reserve began taking action on transactions toward the end of last year to lessen the amount of money flowing to Iraq.
According to a Tuesday report from state news agency INA, which cited Mazhar Mohammed Saleh, the prime minister’s advisor for financial and economic affairs, Iraq’s foreign reserves have surpassed $115 billion. Saleh claimed that the presence of these reserves supported the decision to devalue the currency.
For more economic news, click here