Why the dollar rises and falls in Iraq: the five forces, measured against four years of data

The market rate for the dollar1,588+0.52%↗US dollar to Iraqi dinar+0.52%1,58830D in Iraq is not random, and it is not usually driven by the things people blame. It does not move because a politician spoke, or because “the merchants” decided, or because of a rumour on a Telegram channel, except for an hour or two. Over weeks and months it moves for five reasons, and DinarView’s daily record since May 2022 lets each of them be measured rather than asserted. This article takes them in order of how much they have actually moved the rate.

The five biggest moves, and what caused them

Monthly averages and peaks from DinarView’s collected market rate, dinars per dollar.

1. How many dollars reach the market

This is the force behind three of the five episodes and most of the smaller ones. Iraq’s dollars come from oil, sold by the state; the Central Bank sells them into the economy through its daily window at the official rate, to banks, for approved imports and cash sales. Whatever share of those dollars leaks into the open market, through traders who buy at the window and sell the surplus, through banks’ cash sales, through travellers, sets the supply the street market has to work with. When the window is tightened, as it was by the compliance rules at the end of 2022 and by an interruption in January 2026, the street price rises within days. When it loosens, as it did through 2025, the price falls for months.

The gap between the official and market rates, 18 percent on 3 September 2026, is the price of getting through the window. It widens when the window narrows and narrows when the window widens. Anyone trying to read the rate should watch the window first.

2. Import demand

Iraq imports most of what it consumes, and importers who cannot get dollars at the window buy them in the market. Demand therefore rises with the import calendar: the run-up to Ramadan and the two Eids, the return to school in September, the winter fuel and generator season, and the summer travel season for those flying out with cash. In the record this shows as a tendency for the rate to firm in late summer and autumn, as it did in 2023 (August to November, +4.8 percent) and 2024 (July to October, +2.3 percent), and to soften in spring after the Ramadan peak has passed.

Seasonal tendencies in DinarView’s record; a supply shock overrides all of them.

3. The official rate itself

A change in the peg moves the whole ladder. When the Central Bank cut the official rate from 1,450 to 1,300 in February 2023, the market fell from its 1,728 peak to 1,451 within two months, a sixteen percent drop, even though nothing about supply or demand had changed. The reverse happened in December 2020, before DinarView’s record: the devaluation from 1,182 to 1,450 took the street rate up with it. The official rate has moved only twice in twenty years, so this is a rare force, but when it acts it is the largest.

4. The toman and the region

The Iranian toman227,900−1.13%↗Iranian toman to Iraqi dinar−1.13%227,90030D has fallen from 8,700 per dollar in 2018 to about 170,000 in 2026, and Iran is Iraq’s largest source of consumer imports by land. A cheaper toman makes Iranian goods cheaper in dinars and shifts some dollar demand toward the border trade, where dollars are the settlement currency; sanctions episodes that cut Iran off from dollars push more of that demand into Iraq’s market. The effect is steady rather than sharp: it shows in Erbil’s boards, which quote the toman beside the euro, more than in the national rate.

5. News, for an hour

Political news, a statement from the bank, a rumour about the window, moves the boards immediately and briefly. Traders in the Kifah bourse reprice within minutes, the Erbil boards follow within the hour, and if the news changes nothing about supply the rate is back where it was by the next morning. DinarView’s record shows many single-day spikes of 500 to 1,000 dinars per hundred that reversed within two days. The way to tell a news spike from a real move is to wait for the second morning: if Baghdad opens back where it closed the day before the news, it was noise.

What does not move the rate

• The oil price, day to day. Oil revenue arrives at the state, not the street, and the state sells dollars at a fixed rate whatever the barrel fetched. A sustained oil collapse matters through the budget, over years, as in 2020; a bad week does not.
• Foreign speculation. The dinar is not traded abroad; there is no offshore market to move it.
• Revaluation rumours. The record shows no trace of them. See the article on the official rate.

Reading the rate like the boards do

1. Look at the gap to the official rate on DinarView’s rate board. A widening gap means the window is tight; a narrowing one means dollars are flowing.
2. Check the Baghdad opening on a Saturday. The week’s direction is usually set there.
3. Compare Erbil’s boards with each other. When their spreads widen, the market is uncertain; when they tighten to under a hundred dinars per hundred, it is calm.
4. Ignore the single-day spike until it survives a second morning.

Questions people ask

Will the dollar go up or down next month?

DinarView does not forecast, and nothing on this page is a prediction. The forces above tell you what to watch, not where the number will be.

Why did the rate fall through 2025 when nothing seemed to change?

Because something did change, quietly: more official dollars reached the market through banks, and the gap narrowed from fourteen percent to under ten. Supply moves the rate even when there is no headline.

Does the rate move differently in Erbil and Baghdad?

Same direction, different speed. Baghdad’s wholesale session leads; Erbil’s independent boards follow within the hour and adjust more often through the day. The cities page shows both against the national median.

Where is the data behind this article?

Every figure is from DinarView’s daily record, which begins in May 2022, and from the office boards it reads. The dollar chart shows the full series, and the rate board shows today’s boards and the official rate beside them.