Iraqi Dinar Hit Hard by Unstable US Exchange Rate, Causing Economic Distress for Citizens
The US dollar has been experiencing a recent surge against the Iraqi dinar, causing significant economic distress for citizens. Dollar price is recently standing at around 150,000 Iraqi Dinars. However, during much of February 2023, the exchange rate stood at 100 USD = 170,000 IQD, leaving many struggling to make ends meet. Despite several attempts by the government to stabilize the situation, the high price of the dollar continues to affect various groups of people in Iraq, from small business owners to workers.
The high dollar price has left a significant impact on many families, workers, and traders in Iraq. For instance, Arebara Muhammad, who owns a cigarette shop in Mawlawi Street, says that the instability of the dollar price slows down the market's movement as people do not buy things in bulk like before due to its high price. He adds that he is not selling his goods lately because he sees that his work has just become an exchange of money without any benefits. Since he buys cigarettes with dollars and sells with dinars, he would not get any benefits from it.
Similarly, workers like Idrees in Sulaymaniyah find it difficult to provide for their families due to the high price of the dollar. "Everything I buy has gotten expensive now, so it is difficult for me to provide my family with their basic needs," he says. "I barely earn 15,000 IQD a day when I work." Meanwhile, high school teacher Mr. Jamal explains that the high dollar price has affected him directly because he receives his monthly salary in Iraqi dinar, and now his salary is not enough to cover their monthly needs.
However, not everyone is affected by the high dollar price. Mr. Shwana Ali, who works at a dollar and money exchange store, says that the high price of the dollar has no effect on his work because he would take his revenue from exchanging no matter how much the dollar price rises or falls.
Iraq has a history of fluctuating exchange rates between the dinar and the US dollar. The Iraqi dinar was put into circulation in 1932 and replaced the Indian rupee, which was the national currency during British occupation in World War l. The Iraqi dinar remained tied to the British pound until 1959 when it was pegged to the United States dollar at a rate of 1 IQD = 2.80 USD. After the devastation of the currency in 1971 and 1973, the Iraqi dinar increased to 3.38 USD due to a 5% devaluation. By the end of 1995, 1 USD was priced at 3,000 IQD.
After the US invasion of Iraq, the Iraqi dinar price decreased against the US dollar because 90% of Iraqi total exports received their revenues in the US dollar, which made the valuation of Iraqi dinar stable. In the period between 2014 to 2019, the price of the US dollar versus the Iraqi dinar was semi-stable at 100 USD = 120,000 IQD. However, after 2019, this price changed, with 100 USD = 145,000 to 148,000 IQD, and this price continued until the beginning of 2023.
- Hashim Haji Mousa