DINAR REVALUATION REPORT: 🇮🇶 The 3 Phases of the Iraqi Dinar Exchange Rate Reform

DINAR REVALUATION REPORT: 

🇮🇶 The 3 Phases of the Iraqi Dinar Exchange Rate Reform

1. Closing the Gap Between the Official Rate and the Street Rate

✅ What does it mean?

• The official exchange rate is set by the Central Bank of Iraq (CBI) for legitimate banking and trade operations.

• The "street rate" refers to the rate in the informal market, which is often higher due to:

  • Limited access to dollars,

  • Weak enforcement of monetary controls,

  • A strong black market presence.

🎯 Goal:

• Unify or closely align the official and parallel exchange rates to:

  • Improve transparency,

  • Reduce speculation,

  • Restore confidence in the national currency.

📉 Implications:

• This phase requires:

  • Increasing official dollar supply,

  • Tightening anti-money laundering enforcement,

  • Improving regulation of informal markets.

• It is a technically difficult but foundational step for economic stabilization.

2. Agreement with the IMF and Compliance with Global Standards

✅ What does it mean?

• This phase ensures the Iraqi dinar complies with international financial standards, especially regarding:

  • Currency transfer transparency,

  • Anti-money laundering (AML),

  • Know Your Customer (KYC) regulations.

📋 Involves:

• Collaboration with the International Monetary Fund (IMF).

• Reforming the banking system:

  • Increase capital adequacy ,

  • Improve governance,

  • Enhance oversight and digital infrastructure.

🌍 Why is it important?

• Achieving compliance allows Iraq to:

  • Regain international financial credibility,

  • Attract foreign investment,

  • Ensure full integration with the global financial system.

3. Engagement and International Integration

✅ What does it mean?

• After stabilizing the exchange rate and meeting global standards, Iraq aims to actively engage with international financial markets and economic partners.

🌐 Involves:

• Expanding financial inclusion (bringing more people and businesses into the banking system).

• Encouraging foreign direct investment (FDI) in non-oil sectors.

• Building bilateral and multilateral agreements for trade, finance, and cooperation.

• Increasing the presence of the Iraqi dinar in international financial platforms (e.g., SWIFT, cross-border transactions).

🤝 Expected outcomes:

• A more stable and attractive financial environment.

• Increased use of the Iraqi dinar domestically (reducing dollarization).

• Potential long-term appreciation of the dinar, backed by real economic reforms.

📌 Summary of the 3 Phases

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SOURCE: DINARREVALUATION