🇮🇶⚔️ How the War Between Israel and Iran Affects the Revaluation of the Iraqi Dinar

🇮🇶⚔️ How the War Between Israel and Iran Affects the Revaluation of the Iraqi Dinar

The ongoing or potential war between Israel and Iran can have indirect but serious consequences on the revaluation of the Iraqi dinar (IQD). Here’s how:

1. Regional Instability

Iraq sits in a geopolitically sensitive location, between Iran and Western-allied nations like the U.S. and Israel. A war in the region increases political and economic uncertainty, which weakens international confidence in Iraq's economic reform process.

• Direct impact: Foreign investors and institutions may delay or cancel investments in Iraq.

• Result: The potential for a dinar revaluation gets postponed, since currency revaluation requires a stable and credible economic environment.

2. Oil Market Disruptions

Iraq is heavily dependent on oil exports for over 90% of its revenue. A war in the region can impact Iraq in two ways:

• Positive scenario: If Iranian oil exports are disrupted, global oil prices rise—benefiting Iraq financially.

• Negative scenario: If Iraq’s own infrastructure is affected (e.g., through militia attacks or airstrikes), its oil output may drop, hurting its economy.

📌 In both cases, economic uncertainty increases , making it difficult to implement or plan for a currency revaluation.

3. Central Bank Strategy

The Central Bank of Iraq (CBI) needs financial stability, strong foreign reserves, and investor confidence to proceed with a dinar revaluation. In times of war or geopolitical crisis, the CBI is likely to:

• Delay any planned revaluation.

• Focus instead on protecting reserves and exchange rate stability.

4. Geopolitical Pressures

Iraq maintains relations with both Iran and the U.S. A conflict between these powers could:

• Force Iraq to take sides, risking  sanctions or domestic unrest.

• Complicate its internal politics, especially with Iran-backed militias operating in the country.

Such internal and external pressure reduces the government's ability to implement economic and monetary reforms, which are essential for any credible dinar revaluation.

📉 Conclusion

The war between Israel and Iran does not directly devalue or revalue the Iraqi dinar, but it creates regional instability that delays or derails the revaluation process. For a successful revaluation, Iraq needs:

• A stable government

• Consistent oil revenue

• Investor confidence

• And a peaceful regional environment

All of these are threatened by a broader Middle East conflict.