Iraqi dinar continues slide despite fresh US cash injections

The Iraqi dinar continues to weaken against the US dollar, with the parallel market rate surpassing 1,600 dinars per dollar, a 21% premium over the official rate of 1,320 dinars. Despite new shipments of US cash aimed at improving liquidity, bankers and economists warn that speculation, policy uncertainty, and high demand for dollars outside official channels are driving the gap.

Economist Ali Daadoush notes that demand for dollars far outpaces supply, fueled by speculation, delays in bank transfers, and rising demand for imports from Iran. Many dollars initially sold at the official rate for travel or medical treatment are later resold on the parallel market, further widening the gap.

Economist Abdul Rahman al-Mashhadani highlights additional demand from travelers and traders avoiding the ASYCUDA customs system. While new cash shipments may ease short-term pressure, Nabil al-Abadi of Union Bank of Iraq emphasizes the need for a stronger banking sector and easier access to foreign currency through official channels to reduce reliance on the parallel market.

The Central Bank of Iraq’s foreign reserves dropped to $80.6 billion in July 2026 from $97.4 billion at the end of 2025, a 17.2% decline. The bank attributes the parallel market’s rise to speculation and market expectations, while conflicting statements from lawmakers add to uncertainty. Economists warn that any government-imposed rate, such as 1,500 dinars per dollar, could trigger a negative market reaction.