Iraqi Dinar: IBBC issues Major New Paper on De-Dollarisation of Iraq

Iraqi Dinar: IBBC issues Major New Paper on De-Dollarisation of Iraq

⁠link⁠ to My FX Buddies Blog post https://www.myfxbuddies.com/2024/05/iraqi-dinar-ibbc-issues-major-new-paper.html

This revaluation of the dinar combined with restrictions on dollar transactions has also seriously injured private sector businesses that were engaged in exporting. Previously, many contracts between international firms such as oil companies and their Iraqi employees and suppliers were denominated and often paid in dollars. Iraqi employees and firms could then convert these dollars into dinars at the parallel rate – currently about 1,500 ID/$. However, beginning is 2024, the GoI required, that regardless of the currency specified in contracts, payments will be made in dinars only and at the official rate – 1,310 ID/$. Overnight, many Iraqi employees and firms suffered about a 16% cut in compensation. Adjustment of payments to reflect the new currency realities may not occur until contracts are up for renewal which may not occur for up to five years.