Baghdad:Iraqi newspapers have highlighted the widespread repercussions of the Central Bank of Iraq’s decision to devalue the Iraqi dinar against the US dollar, with concerns mounting over potential impacts on prices and citizens’ purchasing power.
Accourding to National Iraqi News Agency, the semi-official Al-Sabah newspaper reported that the Iraqi parliament is facing urgent economic challenges due to regional developments affecting the country’s economy. The parliament is scheduled to host discussions with the Governor of the Central Bank and the Minister of Finance about the implications following the unexpected exchange-rate adjustment, which led to an expanded debate in parliament after the cancellation of a scheduled agenda.
The decision has raised concerns about a growing disparity between the official and parallel exchange rates, with calls for protective measures for citizens’ purchasing power. Under the new rates, the government will buy dollars from the Ministry of Finance at 1,500 dinars per dollar, while banks and the public will receive dollars at 1,510 and 1,520 dinars, respectively, in cash transactions. The Central Bank maintains that its foreign-exchange reserves are sufficient to meet financing needs and that the measure aims to support domestic production and stimulate local industry.
The decision has provoked mixed reactions among lawmakers and economic experts, with some viewing it as necessary for addressing budgetary pressures, while others caution about its potential to increase prices for imported goods, thus affecting citizens’ livelihoods.
In Baghdad, the Al-Zaman newspaper reported that wholesale markets in Shorja and Jameela districts closed following the announcement, with consumers worried about price hikes for food and essential commodities. Economic experts warn that the decision may increase the cost of imports and weaken purchasing power, particularly for those on low incomes, and advocate for market monitoring to prevent speculative price increases.
Al-Zawraa, associated with the Iraqi Journalists Syndicate, noted significant disruptions in local markets due to the devaluation. The official exchange rate for the public is now set at 1,520 dinars per dollar, a devaluation of over 13%. The parallel market has seen dramatic increases, with exchange rates for $100 surpassing 160,000 dinars and reaching nearly 164,000 dinars, marking unprecedented volatility.
The latest adjustment follows previous changes in December 2020 and February 2023, and further market pressure and price increases are anticipated. The devaluation is preceded by volatility in the parallel market, where rates have sharply increased, illustrating significant market instability before the new exchange rate’s implementation.