Iraq Devalues Dinar by 13% Amid Liquidity Crisis and Hormuz Disruptions

Key Facts

1The Central Bank of Iraq raised the dollar-selling price for the public to 1,520 dinars from 1,320 dinars.

2Iraq is the first Gulf Arab state to devalue its currency since the regional conflict began in late February.

3Iraq's budget relies on oil sales for 90% of revenue, almost all of which pass through the Strait of Hormuz.

The Central Bank of Iraq raised the dollar-selling price for the public to 1,520 dinars from 1,320 dinars, effectively devaluing the currency by approximately 13%. Reuters reported that the decision aims to address a fiscal liquidity crisis and ensure the payment of public salaries. Iraq is the first Gulf Arab state to devalue its currency since the regional conflict began in late February, according to Bloomberg.

Iraq's budget relies on oil sales for 90% of its revenue, almost all of which pass through the Strait of Hormuz, creating significant economic pressure amid current disruptions. According to the Ministry of Oil, Iraqi production has been reduced to 1.2 million barrels per day, while the draft budget assumes an oil price of $58 per barrel. The devaluation follows persistent pressure in parallel markets, where the exchange rate in Baghdad reached 1,685 dinars per dollar following the announcement.