160,000 dinars to the dollar… The parallel market reasserts its authority in Iraq.
160,000 dinars to the dollar… The parallel market reasserts its authority in Iraq.
2026-10-05
Shafaq News – Baghdad
The dollar exchange rate in the parallel market in Iraq has exceeded 160,000 dinars per 100 dollars, in a scene that brings back to the forefront fears of the widening gap between the official price and the market price, coinciding with talk of the arrival of new shipments of the American currency to the country, amid questions about the ability of dollar liquidity to calm the market and curb speculation.
The data indicates that the official price remains at 1,320 dinars per dollar in official transactions, while its price in the parallel market, as of Monday evening, exceeded 160,000 dinars per 100 dollars, amid a wide gap between the two prices that reflects the continued pressure on the exchange market.
Reasons for the rise: speculation, anxiety, and delayed remittances
In an interview with Shafaq News Agency, economist Ali Daadoush said that speculation and uncertainty, along with delays in official transfers through banks and increased demand for dollars to finance imports from Iran, are the main reasons for the current and fluctuating rise in the exchange rate.
Daadoush added that the uncertainty includes traders, importers and citizens who hold dinars, due to fears of a possible change in the exchange rate in the 2027 general budget, indicating that these factors collectively put pressure on the dollar in the parallel market.
He explained that the dollar traded in the parallel market comes to a large extent from the currency that the central bank sells to citizens for travel, study and treatment purposes, and then part of it returns to the local market after it is sold, which is known as the “reverse dollar” or “return dollar”.
He pointed out that the demand for the dollar has become much greater than the supply of it in the market, which is driving prices up and increasing the state of volatility.
Banks: Shipments alone are not enough
For his part, Nabil Al-Abadi, director of Al-Ittihad Bank, told Shafaq News Agency that the movement of the exchange rate in the parallel market is linked to a set of factors, foremost among them the level of demand for the dollar and the size of its supply, as well as the nature of transactions and transfers that take place outside official banking channels.
He explained that the arrival of new shipments of dollars to official channels could contribute to supporting cash liquidity, but its impact on the parallel market depends on the speed of its entry into the market and the extent to which it reaches those who actually demand the currency.
He pointed out that addressing the gap between the official and parallel exchange rates is not only related to injecting dollars, but also requires strengthening the role of the banking sector and facilitating access for dealers to foreign currency through official channels, thereby reducing the need for the parallel market.
What does the central bank’s data say?
According to data from the Central Bank of Iraq, foreign reserves fell to $80.633 billion by the end of July 2026, compared to $97.432 billion at the end of last year, a decrease of about $16.8 billion, or approximately 17.2 percent, over seven months.
In contrast, the Central Bank confirmed in a statement issued on September 19 that its foreign reserves are sufficient to meet the demand for foreign currency to finance foreign trade, settle bank cards and travelers’ requests at the official rate, attributing the current rise in the exchange rate to speculation, expectations and exploitation of the geopolitical conditions in the region.
From Kurdistan: Warning against fixing the dollar at 150,000
The concern is not limited to Baghdad. Jabbar Goran, spokesman for the currency exchange market in Sulaymaniyah in the Kurdistan Region, warned of potential negative repercussions if the Iraqi government proceeds to fix the dollar exchange rate at 150,000 dinars, suggesting that this rate will not be adopted in the general budget.
Goran said during a press conference attended by Shafaq News Agency, “The reaction of citizens and the market will be very negative and bad if the Iraqi government fixes the price of the dollar at 150,000 dinars,” adding: “Therefore, I believe that the price of the dollar will not be fixed in the budget at this level.”
He also expressed his surprise at the remarks made by a member of parliament regarding the possibility of amending the dollar exchange rate, noting that this matter falls within the jurisdiction of the Central Bank of Iraq.
He said: “It is strange to me that a member of parliament would talk about adjusting the dollar exchange rate, as this matter is only within the powers of the Central Bank.”
A true test for the central bank and the government
Observers believe that psychological factors and future expectations have become an influential part of market movement, as the expectation of a rise in the dollar’s price prompts some traders to increase their demand for it in anticipation of any change, which may create additional demand that raises the price and increases the gap.
The continued difference between the official and parallel exchange rates creates an incentive to seek dollars outside official channels, which makes addressing the gap dependent on the banking system’s ability to provide dollars regularly and transparently to legitimate demand, and not just by increasing supply.
The current situation puts the central bank and the government to a real test. Increasing dollar liquidity may provide some relief to the market, but it will not be enough on its own if the factors that fuel demand and speculation remain in place.
The most prominent question remains: Do the new dollar shipments represent the beginning of a path that will calm the market and reduce the gap, or will the parallel market absorb this liquidity and rise again? The answer will largely depend on the ability of official channels to meet demand and enhance confidence in the stability of the exchange rate, and on the decisions that the 2027 budget will contain regarding the exchange rate.
shafaq.com
