Expert attributes drop of USD exchange rate to improved economy
Shafaq New/ The Iraqi dinar has gained ground against the U.S. dollar in recent days, with exchange rates falling to 1400 dinars per dollar, Jabbar Koran, the official spokesperson for the Sulaimaniyah currency market, said.
Koran attributed the dinar's strength to a combination of factors, including the positive impact of Iraqi Prime Minister Mohammed Shia al-Sudani's recent visit to Washington, the increased use of smart cards for dollar withdrawals, and the growing trade between Iraq and Turkiye, which is now conducted in both Iraqi dinars and Turkish liras.
"Al-Sudani's visit to Washington has led to increased U.S. support for the Iraqi economy and optimism among American parties regarding Iraq's infrastructure and banking reforms," Koran told Shafaq News Agency. "This has boosted confidence in the Iraqi economy and reduced demand for dollars."
Koran also highlighted the growing use of smart cards, which allow account holders to withdraw dollars from abroad. This, he explained, has reduced the need for individuals to purchase dollars locally, further contributing to the dinar's appreciation.
The recent agreement between Iraq and Turkiye to conduct bilateral trade in their respective currencies has also played a role in strengthening the dinar. "With an annual trade volume between the two countries ranging from 20 to 24 billion dollars, this shift away from dollar-denominated transactions has decreased the demand for U.S. currency in Iraq."
"The Iraqi central bank has been encouraging the use of alternative currencies in international transactions," he said. "A recent agreement with Saudi Arabia, for instance, allows for future trade to be settled in the respective national currencies of both countries."
"In the past, citizens would convert a portion of their salaries into dollars to cover housing loans, car payments, or other outstanding obligations," Koran explained. "However, with the increasing availability of alternative payment methods and the promotion of the dinar, people are no longer as reliant on the dollar."
While Koran expects the dollar to stabilize around 1400 dinars in the near term, he acknowledged the possibility of further appreciation, potentially reaching 1420 dinars per dollar. The central bank, he noted, has achieved its target for the exchange rate, but market dynamics could lead to further gains for the dinar.
