Iraq Devalues Dinar to Combat Liquidity Crisis and Hormuz Export Disruptions

Key Facts

1Iraq has devalued its currency to manage a cash squeeze caused by ongoing war and the closure of the Strait of Hormuz.

Iraq has devalued its national currency to manage a cash squeeze caused by ongoing war and the closure of the Strait of Hormuz. The National reported that the Central Bank of Iraq set a new official exchange rate of 1,500 Iraqi dinars per US dollar, following a recommendation approved by the Council of Ministers to address a deepening fiscal crisis.

The decision follows severe restrictions on oil exports, which account for over 90% of the national budget, as the Hormuz closure disrupted tanker traffic and delayed loadings from Basra terminals. By adjusting the rate, the government expects to receive approximately 13% more dinars for every dollar of oil sold, allowing the finance ministry to fund the 2026 budget and cover public sector salaries.