Iraq weakens dinar to 1,520 per dollar

Iraq’s cabinet adopted a revised exchange-rate structure that weakens the dinar, setting the public-facing rate at 1,520 dinars per U.S. dollar, compared with the previous official rate of 1,320. The changes took effect Wednesday, October 7, as the government faces pressure on oil revenue and a large projected budget deficit. Under the schedule announced by the Central Bank, the state will buy dollars from the Finance Ministry at 1,500 dinars per dollar, and the bank will sell dollars to commercial banks at 1,510. The Central Bank’s announced rate for banks selling dollars to the public is 1,520. Other accounts of the new schedule give a 1,510 rate for sales by banks and nonbank financial institutions to end beneficiaries, leaving the precise rate applicable to some consumer transactions unclear. Iraq’s economy depends heavily on oil sales, which provide most state revenue. The government earns dollars from crude exports and pays much of its domestic spending in dinars. Economists cited in reports on the decision said the weaker currency would increase the dinar value of dollar oil earnings, while making imports more expensive and reducing household purchasing power.