Iraq’s Central Bank moves to strengthen dinar against US dollar

Iraq’s Central Bank moves to strengthen dinar against US dollar

Iraq's Central Bank has a new plan to increase the value of the Iraqi dinar against the US dollar. 

The bank released a statement this week outlining the plan. The measures are as follows:

Reducing the US dollar to Iraqi dinar exchange rate for travel or internet purchases from 1,470 dinars to 1,465. 

Helping private banks strengthen their foreign currency reserves that are not the US dollar. The Central Bank specifically named the Chinese yuan, the euro, the Emirati dirham and the Jordanian dinar. 

Providing options to the public for selling foreign currencies in government banks for the purpose of travel for the Hajj pilgrimage, medical treatment and study. 

What it means: For years, the official rate of the US dollar to the Iraqi dinar was $1 to 1,182 dinars. Both dollars and dinars are used in Iraq, and the rate on the street was often rounded up to 1,200 dinars to the dollar. 

In December 2020, Iraq's Central Bank lowered the dinars’ exchange rate to 1,470 dinars to the dollar for individuals and 1,460 for banks. The decision was due to a liquidity crisis, low oil prices and economic hardship related to the coronavirus pandemic.

Central banks often devalue their own currency in a bid