Central Bank: Our responsibility is to maintain the value of the dinar against foreign currencies
Central Bank: Our responsibility is to maintain the value of the dinar against foreign currencies
10-13-2026
The Central Bank of Iraq confirmed on Tuesday that its mission is currently limited to maintaining the value of the Iraqi dinar against foreign currencies. Samir Fakhri, the representative of the Governor of the Central Bank of Iraq, stated at the Middle East Research and Peace Forum (MERI), held in Erbil, that “the issue of the exchange rate and its relative importance differs from one country to another,” explaining that “the exchange rate is important for Iraq, because the Iraqi economy is rentier in nature and depends on dollar revenues.”
He added that “Iraq’s sources of income depend on external demand, and the most important equation in the Iraqi economy is government spending in dinars.” He pointed out that “the use of the dinar as a means of government spending is a fundamental driver, representing a component of aggregate demand, which is linked to oil revenues, and the exchange rate is the link to this.” He continued, “The Central Bank’s role is to maintain the value of the local currency against foreign currencies,” explaining that “growth in the private sector boosts GDP and reduces demand for the dollar.”
He stressed that “every dinar spent by the general budget generates a demand for dollars through the central bank, given the limited contribution of local economic sectors to the gross domestic product.”
He also stressed “the importance of working to develop the private sector and enhance its actual contribution to the gross domestic product, which contributes to reducing the demand for the dollar,” noting that 60 to 70% of the dinars spent are returned in the form of demand for the dollar, while the remaining part accumulates within the central bank’s reserves.
He explained that “the Central Bank’s reserves are owned by the state, and the government represents the equivalent of the dinars that were spent through the exchange rate mechanism,” stressing that “Iraqi exports depend on crude oil by 98%, while oil revenues constitute more than 93% of total public revenues.”
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