Iraq devalues dinar to 1,520 per US dollar
USO•Iraq’s cabinet approved a new exchange-rate structure setting the dinar at 1,520 per US dollar, about 14.5% below the previous official rate. The change took effect Wednesday as oil-export disruption reduced Iraqi exports to around 2.34 million barrels per day in August.
1. New exchange-rate structure
Iraq’s cabinet approved a new exchange-rate structure setting the dinar at 1,520 per US dollar, roughly 14.5% below the previous official rate. The decision set the Finance Ministry’s purchase rate at 1,500 dinars per dollar and the rate charged by banks and non-bank financial institutions to end beneficiaries at 1,510 dinars.
2. Oil revenue disruption
Economists said the devaluation responded to disruption in oil sales, Iraq’s largest source of revenue, caused by the war on Iran. Iraqi analyst Mohammed al-Saffar said the change gives the government more dinars per dollar of oil revenue but raises import costs and reduces households’ purchasing power.
3. Budget and exports
A draft budget assumes oil at $58 a barrel, projects spending of 217 trillion dinars, or about $166 billion, and forecasts a deficit above 40 trillion dinars, four members of parliament’s finance committee said. The budget envisages crude exports of around 4 million barrels per day, including Kurdistan shipments; exports fell to around 2.34 million barrels per day in August from more than 3.6 million before the war, while international oil prices rose above $100 a barrel.
