In the new government’s first test: Al-Zaidi secures the return of the dollar to Baghdad and ignites market anticipation.
In the new government’s first test: Al-Zaidi secures the return of the dollar to Baghdad and ignites market anticipation.
5-3-2026
Researcher Shatha Khalil
In the first economic test for the new Iraqi government, Prime Minister-designate Ali Faleh Kazem al-Zaidi succeeded in securing a swift response from the United States after requesting the resumption of dollar cash shipments to Baghdad. This move carried both political and economic significance, reflecting the new government’s ability to establish early channels of understanding with Washington on a sensitive issue affecting Iraq’s daily monetary stability. The rapid US response also suggested that the financial relationship between the two sides remains based on coordination despite regional tensions. The arrival of the first shipment was not merely a banking procedure, but an early vote of confidence in the new government and a message of reassurance to Iraqi markets. In a country where price movements and the exchange rate are directly linked to the availability of dollars, any breakthrough in this matter immediately becomes a major economic event.
Baghdad, Iraq – The arrival of the first shipment of US dollars from the United States to Baghdad after a period of hiatus was not just a routine banking event, but an economic moment carrying far greater implications than the value of the shipment itself. In a country whose economy is almost entirely dependent on oil, the flow of dollars is integral to daily financial security, and any disruption is enough to unsettle markets and increase the sensitivity of the exchange rate.
The Iraqi government confirmed that the shipment arrived after the stabilization of air traffic and the easing of political tensions in the region, a clear indication that the Iraqi economy is not only affected by supply and demand factors, but also by geopolitical developments, air routes, and international decisions.
Although officials clarified that these shipments represent only about 5% of the total required cash supply, and that the Central Bank of Iraq holds the majority in its reserves, the significance of the news lies more in its economic symbolism than in the specific figure. The continued flow of dollars means that the artery of foreign trade remains open, as Iraq relies on the US currency to finance imports, settle payments, and stabilize the exchange market.
Economically, the resumption of shipments sends three key signals. First, the central bank still has the operational capacity to manage liquidity and prevent any sudden shortages in the market. Second, commercial demand for dollars will remain met, reducing the chances of the parallel market expanding. Third, and most importantly psychological, it reassures markets that the financial relationship with Washington remains stable.
But behind this calm lies a deeper dilemma. The fact that a portion of Iraq’s liquidity is tied to external mechanisms reveals the extent to which the country relies on a financial system it does not fully control. Any political instability, regional tension, or change in banking compliance regulations could quickly translate into internal pressure on the dinar and prices.
This is the real challenge facing Iraq: not just securing dollars, but building an economy that cannot be shaken by a delayed cash shipment or regional tensions. A strong nation is not measured solely by the size of its reserves, but also by its ability to access them without worry.
Economic Studies Unit / North America Office,
Links Center for Research and Strategic Studies
rawabetcenter.com
