Iraq devalues its currency as Iran-U.S. war disrupts oil shipping routes

Baghdad (AP) — Iraq devalued its currency on Wednesday, adjusting the official exchange rate from approximately 1,300 dinars to the U.S. dollar to 1,500 dinars to the dollar. The country's central bank announced the change at a Cabinet meeting the previous evening, aiming to address financial, economic, and monetary needs. The previous exchange rate had been in place since 2023, and the gap between the official and market rates had expanded in recent months due to the U.S.-Iran conflict and the disruption of oil shipping routes in the Strait of Hormuz.

Iraq's economy heavily depends on oil exports, which were primarily shipped via the strait until the war began. As a result, Iraq has had to transport oil overland through Syria, a more costly and inefficient method. Following the official devaluation announcement, the market rate surged to over 1,700 dinars to the dollar. Consequently, Iraq's Finance Ministry will now sell dollars at 1,500 dinars per dollar, while consumers purchasing from banks will pay 1,520 dinars per dollar at the new official rate.