Dollarization and the parallel market control the exchange rate in Iraq.
Dollarization and the parallel market control the exchange rate in Iraq.
2026-01-31
Shafaq News – Baghdad
Economic expert Manar Al-Obaidi confirmed on Saturday that the dollar exchange rate in Iraq has become the only economic indicator that citizens trust, given the lack of confidence in other official indicators such as inflation, unemployment, and GDP, due to the absence of transparency and the lack of clarity in the calculation mechanisms.
Al-Obaidi explained in a Facebook post, which was reviewed by Shafaq News Agency, that the rise or fall of the dollar does not necessarily reflect the movement of basic prices, indicating that the change in the exchange rate is only one factor among the causes of inflation, and not the decisive factor.
According to Al-Obaidi, the exchange rate in the parallel market is governed by the supply and demand equation, and is affected by several factors, most notably the heavy reliance on imports, which exceed $70 billion annually, informal trade, the purchase of foreign services, in addition to the continued dollarization of some sectors such as real estate and cars.
He pointed out that the dollar crisis in Iraq is a “supply crisis” before it is a price crisis, due to the limited sources of foreign currency and their near confinement to the central bank, in contrast to the absence of investment, tourism and remittances from expatriates.
Al-Obeidi concluded by stressing that the solution to the exchange rate crisis is not to change the official price, but rather to restore the balance between supply and demand, through rationalizing imports, expanding trade financing channels, and encouraging investment and tourism, which will restore stability to the dinar without imposing additional burdens on the citizen.
shafaq.com
