Iraq Central Bank Sets Dinar at 1,520 per Dollar Effective 27 August 2026

The Central Bank of Iraq adjusted its exchange bands on Wednesday after the Finance Ministry began selling oil dollars at 1,500 dinars. Reserves had declined from roughly 100 billion to 80 billion dollars since March, when Hormuz transit disruptions cut export volumes by more than half. Public-sector wages require approximately 5 billion dollars monthly; the new rate reduces that dollar cost by about 650 million while increasing the dinar cost of imports.

Iraq's oil dependence exceeds 90 percent of government revenue. Cumulative losses since March are estimated at 80 billion dollars by state marketer SOMO. The devaluation follows the rial's earlier collapse under parallel sanctions pressure and marks the first Gulf peg adjustment since the closure. Baghdad's choice mirrors 2014 and 2020 precedents when revenue shocks forced similar trade-offs between salary continuity and currency defense.

Competing claims center on reserve adequacy versus fiscal necessity. The central bank statement asserts reserves remain sufficient for trade and card settlements, yet the rate shift itself signals constrained dollar inflows. Primary records show no new allocation mechanism; the adjustment simply prices each remaining dollar higher for domestic recipients.

Further devaluations or import compression are likely if exports remain below 2.5 million barrels per day through year-end. Regional producers face identical exposure while Hormuz access stays restricted.