Iraq’s dinar devaluation tests efforts to protect consumers from rising prices
Iraq’s decision to devalue its currency has exposed the competing interests of households and the state, as residents warn of rising living costs while economists argue the move could help protect public finances amid a sharp fall in oil revenue. The Central Bank of Iraq raised the official dollar selling rate from 1,320 to 1,520 dinars on October 7, a devaluation of about 15 per cent. The move…
The Central Bank of Iraq recently raised the official dollar selling rate from 1,320 to 1,520 dinars, marking a 15 percent devaluation of the currency. This move came amid a sharp decline in oil revenue, largely due to disruptions in exports through the Strait of Hormuz. As household expenses rise, some residents in Erbil lament the worsening situation, particularly as most goods, including food and medicine, are imported and their prices are likely to escalate further.
The devaluation impacts both those earning in dinars and those paid in dollars, while the parallel market rate is much higher, exacerbating the pressure on households. Experts argue that the adjustment is necessary to protect public finances but admit that the full impact on purchasing power remains unclear.
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