Iraq's parallel exchange-rate gap narrows to 9% from 24%, governor says

Summary

• Central Bank governor Nizar Nasser Hussein said the parallel-market gap fell from 24% to 9%.
• He made the remarks during a parliamentary Investment and Development Committee visit to the bank.
• A narrower gap lowers import costs and weakens the black market's pull on traders.

The latest

The gap between Iraq's official exchange rate and the parallel market has narrowed to 9%, down from 24% previously, Central Bank Governor Nizar Nasser Hussein said. He spoke during a visit by parliament's Investment and Development Committee to the bank. Hussein also denied that any new banknotes are being printed, rejecting circulating claims to the contrary.

Details

• The figure: Hussein put the current spread between the official rate and the parallel market at 9%, against 24% at an earlier point, according to the Iraqi News Agency. He did not specify the dates attached to either reading, nor the period over which the narrowing took place.
• The setting: The governor made the statement during a visit by parliament's Investment and Development Committee to the Central Bank, according to the Iraqi News Agency. The bank did not detail what else was discussed during the session or whether the committee requested further data.
• The currency denial: Hussein denied that any new banknotes are being printed and rejected the accuracy of circulating claims on the subject, the agency reported. He did not identify the source of those claims or say what prompted the bank to address them publicly.
• What a gap means: A parallel-market premium is the difference between the official rate a central bank sets and the price traders actually pay outside it. The wider that premium, the stronger the incentive for importers and investors to source dollars outside official channels.
• The import channel: A spread of 9% rather than 24% means companies buying abroad at the parallel rate face a smaller markup above the official price, cutting the effective cost of imported goods for firms that cannot access official dollars.
• Who is affected: Importers, investors and traders are the groups most directly exposed to the spread, since the gap determines whether it pays to convert outside the official window. A narrower premium reduces the profit margin available from that arbitrage.
• Named attribution: All figures in the announcement come from the governor himself, delivered to lawmakers rather than through a published bank report. No accompanying data series, methodology or market survey was released alongside the 9% figure.
• Unstated elements: Hussein did not say what measures the bank credits for the narrowing, nor whether the 9% level is considered stable. The bank announced no new policy step in connection with the figures.

Background

Iraq operates an official exchange rate set by the Central Bank alongside a parallel market where the dinar trades freely. The spread between the two has been a recurring pressure point for importers who rely on dollars sourced outside official channels.

Between the lines

Two separate messages were delivered in one appearance: a narrowing spread and a denial of new currency printing. Both touch the same underlying concern, since the suspicion that a central bank is expanding the money supply typically feeds pressure on the parallel rate. Addressing the printing rumor before lawmakers suggests the bank treats it as material to confidence in the dinar.

What's next

Watch whether the Central Bank publishes data supporting the 9% figure, whether the parliamentary committee follows up with requests for exchange-rate records, and whether the spread holds at that level.

Source: Iraqi News Agency (INA)