Iraq has devalued the dinar, raising the official rate from 1,320 to 1,520 per US dollar after the cabinet approved the change on Tuesday 6 October 2026, according to Al Jazeera. Banks and exchange companies began selling dollars at the new rate on Wednesday. The Iraq dinar devaluation follows a collapse in oil exports linked to the war on Iran and disruption to the Strait of Hormuz, the report says.
In this report
- Why Baghdad did it
- The political backlash
- What it means for households and traders
- What to watch
- Iraq dinar devaluation: questions
Why Baghdad did it
Oil pays more than 90% of the federal budget, Al Jazeera reports. Exports, mostly routed through Hormuz, fell by as much as 90% at one point and were 2.34 million barrels a day in August against a pre-war average of 3.6 million. Prime Minister Ali al-Zaidi said Iraq lost about $60bn in oil revenue, and Central Bank of Iraq reserves fell from about $106bn to roughly $80bn by late August. The 2027 budget plans spending of 217 trillion dinars (about $166bn) with a deficit above 40 trillion dinars (about $30bn). The central bank called the move a strategic step to steady finances.
The political backlash
Dozens of MPs said parliament was not told how or why the decision was made, and one called it “waging war on the poor”, per Al Jazeera. Parliament cancelled its Wednesday agenda to debate the issue, and the finance minister and central bank governor were due to appear on Thursday. The outcome of that session was not in the report.
What it means for households and traders
Imports cover much of Iraq’s food, medicine and industrial inputs, so a weaker dinar raises costs. Most Iraqis cannot buy dollars at the official rate and pay the parallel-market price, which rose after the change, widening the gap, according to the report. For an exporter such as a Vietnamese food producer selling into Iraq, a lower dinar value can make prices in local currency harder to sustain and raise payment risk, so contract currency and payment terms matter.
What to watch
Watch the parliamentary review, the gap between official and parallel rates, and oil flows. Broader markets are reacting to the same shock: investinglive reported on 5 October that Brent was near $102 and that G7 countries had announced a 100 million barrel emergency stock release. Our coverage: Gulf oil price shock and the Strait of Hormuz dispute.
Iraq dinar devaluation: questions
What is the new official rate?
1,520 dinars per dollar, up from 1,320.
When did it take effect?
Banks and exchange companies began selling dollars at the new rate on Wednesday 7 October 2026, per Al Jazeera.
Why was the dinar devalued?
Falling oil revenue after Hormuz disruption and a large budget deficit, according to the report.
Who opposes it?
Dozens of MPs, who say parliament was not consulted.
Will prices rise?
Al Jazeera reports imports become more expensive, which feeds through to food and medicine costs.
Related: US stocks slide as oil and yields rise.
