Tools to control the exchange rate of the US dollar against the Iraqi dinar and reduce inflation
Tools to control the exchange rate of the US dollar against the Iraqi dinar and reduce inflation
2026-10-13
Shafaq News – Baghdad
The Prime Minister’s financial and economic advisor, Mazhar Muhammad Salih, confirmed on Tuesday that controlling the exchange rate and maintaining its stability came through integrated coordination between monetary, financial and trade policies, while he pointed out that addressing inflation requires integrated measures to protect the purchasing power of the citizen.
Saleh told Shafaq News Agency that “official foreign currency reserves are one of the most important tools of the Central Bank in managing the exchange market and meeting the legitimate demand for dollars, in line with the approved official rate, and contribute to achieving a balance between supply and demand for foreign currency.”
He explained that “the role of the Central Bank is not limited to intervening in the exchange market, but extends to managing local liquidity, regulating foreign transfers, enhancing oversight of banking operations, and combating fictitious transfers and manipulation of commercial invoices, in order to limit the leakage of foreign currency into illegal activities and narrow the opportunities for speculation.”
He explained that “the government assumes a parallel responsibility by controlling public spending, rationalizing imports, facilitating trade procedures, strengthening market oversight, and ensuring the smooth entry of basic goods.”
He pointed out that “sustainable exchange rate stability is not achieved by monetary measures alone, but requires the alignment of fiscal policy with monetary and trade policy, especially in the Iraqi economy, which relies heavily on oil revenues to finance the budget and provide foreign currency.”
He pointed out that “the success of these policies is linked to reducing the gap between the official price and the parallel market price, providing foreign currency for legitimate trade, and enhancing confidence in the banking system,” stressing that “combating speculation should not be limited to supervisory measures, but should be based on addressing the causes of market imbalances and ensuring the stability of monetary and trade expectations.”
Regarding inflation resulting from raising the exchange rate, the Prime Minister’s financial and economic advisor explained that “the impact of the exchange rate change on the general price level is determined by the magnitude of the change, the extent to which the economy depends on imports, and the degree to which the increased cost of foreign currency is passed on to the prices of local goods and services.”
He added that “this impact could be seen in Iraq in the prices of food, medicine, consumer goods, and production and construction supplies, as well as its repercussions on transportation, distribution and production costs.”
He pointed out that “determining an accurate percentage of inflation resulting from the exchange rate adjustment requires relying on actual data on prices, inflation rates, the timing and magnitude of the change, while distinguishing between the effect of the exchange rate and other factors affecting prices, such as import and transportation costs and disruptions in supply chains.”
He explained that “the immediate government response was to adopt a comprehensive package of measures aimed at containing price pressures and protecting the purchasing power of citizens,” indicating that “among the most prominent of these measures is the continuation of government support for fuel, petroleum products and basic services, maintaining the stability of the food and medicine supply, and reviewing customs duties and postponing or reducing them on food and essential goods when needed, in order to limit the transfer of increased costs to the end consumer.”
He stressed that “tightening control over markets and preventing monopolies and the exploitation of exchange rate changes to impose unjustified increases is necessary to protect the consumer,” noting “the importance of these measures being accompanied by directing support to the most affected groups, reviewing the efficiency of public spending, and strengthening local production to reduce dependence on imports, thus mitigating the economy’s exposure to external shocks.”
He pointed out that “these policies are gaining additional importance in light of the Iraqi economy being affected by geopolitical fluctuations and disruptions to trade and supply routes, and the resulting pressures on oil exports, public revenues, and transportation and import costs.”
He stressed that “addressing inflation requires considering the available financial resources and avoiding an ill-considered expansion in spending that could add new pressures on monetary and financial stability.”
The Prime Minister’s financial and economic advisor added that “the government and central bank’s commitment to controlling the exchange rate and preventing speculation should be translated into integrated policies that achieve monetary stability, maintain the flow of legitimate trade, reduce inflation, and protect the purchasing power of the citizen.”
Saleh concluded by saying that “the true measure of the success of economic policy is not limited to the stability of the official exchange rate, but also includes the reflection of this stability on the prices of goods and services and the standard of living of citizens. Support and control measures, review of customs duties, and monetary and fiscal policies will remain subject to continuous evaluation, in order to achieve a balance between protecting the standard of living of citizens and maintaining financial sustainability, in light of the challenges facing the national economy and the fluctuations in oil revenues.”
Last Wednesday, the Central Bank announced the adoption of new exchange rates, setting the price of buying dollars from the Ministry of Finance at 1,500 dinars, selling them to banks at 1,510 dinars, and to the public at 1,520 dinars, effective from October 7, 2026.
shafaq.com
