Iraqis in Baghdad protest devaluation of dinar

ERBIL, Kurdistan Region - Hundreds of Iraqis protested on Wednesday near the Central Bank in Baghdad against the rapid devaluation of the Iraqi dinar and called on the government to act to reverse the process. 

The protesters rallied to voice concern against Iraq’s worsening currency which has seen the prices of many goods surge, as public servants continue to suffer with a reduced salary from the drop in currency value. 

Iraqi Prime Minister Mohammed Shia’ al-Sudani - who has vowed to control the unstable exchange rate - sacked the governor of the country’s Central Bank on Monday, replacing Mustafa Ghalib Makhif with Ali Mohsen al-Alaq, who will serve as the acting governor. 

“The rise of the dollar came as a hit to the poor, to the lower classes. The poor do not have a voice except for these people who protest for them … I want to make it clear that the government that accepts this situation is not an Iraqi government, but a subordinate one, one of political parties and parties in Iraq are an epidemic,” Firyal al-Husseini, an independent activist from Karbala, told Rudaw’s Mustafa Goran at the protest site.

The exchange rate of one USD reached 1,670 IQD in the currency markets of Iraq and the Kurdistan Region on Friday, continuing the massive depreciation of the Iraqi currency in recent weeks. The official rate set by Baghdad is 1,470 IQD for $1. 

The dinar trended around 1,610 to the US dollar on Wednesday. 

Sudani on Sunday issued a number of decisions to control the fluctuation of the Iraqi dinar’s exchange rate and to counter the depreciation. 

Some of the decisions taken to control the fluctuation included financing the Central Bank of the Trade Bank of Iraq with an additional $500 million to open credits for small merchants, opening a new foreign currency selling window for small traders by the Trade Bank of Iraq, authorizing the import of goods for companies registered with the trade ministry, and facilitating the import procedure.

The depreciation of the Iraqi dinar has been attributed to the New Year holidays, the closure of banks, as well as pressure and tighter restrictions from the United States, with Washington maintaining strong control over Iraq’s dollar supplies. 

Iraqi Foreign Minister Fuad Hussein on Friday told Rudaw that an Iraqi delegation will visit Washington in early February to discuss the exchange rate fluctuations with US officials. 

In December 2020, Iraq’s Central Bank announced the devaluation of the country’s currently in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.

The devaluation of the dinar struck the public hard as government employees get paid in dinars, meaning they were able to afford less with their salaries given that many imported goods are paid for in dollars.