The Central Bank of Iraq attributes the rise in the dollar exchange rate to "market speculation".
Rudaw Digital reported that the Central Bank of Iraq attributed the rise in the US dollar exchange rate against the Iraqi dinar to "market speculation , expectations , and the misuse of geopolitical conditions in the region." In a statement issued on Saturday , September 19 , 2026, the Central Bank
stated , "In light of what some media outlets are reporting regarding rising prices and a slowdown in market activity , the Central Bank of Iraq announces that it has sufficient foreign reserves to meet all demands for foreign currency related to financing foreign trade , settling bank cards , and travelers' requests for cash dollars at the official exchange rate ." The statement clarified that "the rise in the exchange rate in local markets is due to market speculation , expectations , and the misuse of geopolitical conditions in the region to disrupt the economic and financial situation by some who benefit from this situation." The Central Bank of Iraq affirmed its continued financing of foreign trade according to approved purposes and channels , ensuring the smooth flow of imports and meeting the needs of the local market . The Central Bank of Iraq urged citizens to "rely exclusively on official information and data issued by the bank and not to be misled by news or information circulating from unreliable sources ."
In case of any violations or inquiries, citizens can submit complaints and reports through the official website of the Central Bank of Iraq. The exchange rate of the US dollar has risen in recent days , reaching 1600 Iraqi dinars .
Central Bank: Exchange rate rise due to speculation and exploitation of geopolitical conditions
The Central Bank of Iraq confirmed on Saturday that its foreign reserves are sufficient to meet all demands for foreign currency, while attributing the rise in the dollar exchange rate in local markets to speculation, expectations and exploitation of the geopolitical conditions in the region.
The bank stated in a statement that "in light of what some media outlets are reporting regarding rising prices and a slowdown in market activity, the Central Bank of Iraq has sufficient foreign reserves to meet all demands for foreign currency related to financing foreign trade and settling bank cards, as well as travelers' demands for cash dollars at the approved official exchange rate."
He added that "the rise in the exchange rate in local markets is due to market speculation, expectations, and the misuse of geopolitical conditions in the region to disrupt the economic and financial situation by some beneficiaries of this situation."
The bank affirmed its continued commitment to financing foreign trade according to approved purposes and channels, ensuring the smooth flow of imports and meeting the needs of the local market.
The Central Bank called on citizens to rely exclusively on official information and data issued by it, and not to be swayed by news and information circulating through unreliable sources.
He pointed out that citizens can submit complaints, reports and inquiries related to violations through the official website of the Central Bank of Iraq.
The dollar is disrupting markets... and proposals are being made to curb the rising exchange rate.
Several factors contributed to the sharp rise in the dollar exchange rate in the parallel market to about 160,000 dinars, including, according to economic experts, speculation in the parallel market, which is active from time to time, taking advantage of the high demand for the dollar, geopolitical tensions in the region, as well as the impact of the US Federal Reserve’s decision to raise the interest rate, which put additional pressure on the Iraqi currency, which needs continuous dollar inflows.
It is noted that the rise in the dollar's price has led to a significant increase in the prices of food and basic commodities, and a reluctance among citizens to buy, resulting in a stagnation of commercial markets.
High prices and stagnation
Regarding the rise in the dollar exchange rate, academic and economic researcher Dr. Amr Hisham believes that several reasons lie behind the rise, explaining that they are divided into essential and secondary reasons.
Hisham explained to Al-Sabah that the core issue lies in the statements of some officials about “removing zeros” from the Iraqi currency, noting that the statements have cast a shadow on citizens, as some of them have turned to acquiring dollars or what is called an “investment portfolio.”
Or "the hedge basket".
He added that tensions in the region, pressure on Iraq’s hard currency reserves, and rumors about raising the exchange rate all contributed to this increase, noting that the country’s hard currency reserves have been depleted, although they are still reassuring, but continuing in this manner for several months may exacerbate the situation, according to the spokesman.
He added that among the other reasons is that some traders are trying to evade the “ASYCUDA” system by buying dollars from the parallel market. In addition to the delay in the arrival of the dollar shipment from America and the rumors that accompanied it, the reduction of the travelers’ dollar allowance from $3,000 to $2,000 also contributed to this increase, which prompted many travelers, especially those wishing to seek treatment abroad, to secure their dollar needs by buying it from the parallel markets.
Traders' speculations
Regarding the secondary reasons for the rise in the exchange rate, Hisham explained that some traders resorted to speculating on the dollar, raising its exchange rate in anticipation of a rapid decline. He called on the relevant authorities to stand firmly against rumors and block the path of those seeking to harm the country’s economy and paralyze its movement, or those trying to enrich themselves at the expense of the citizen and his daily sustenance.
slow crawl
On a related note, academic and economic researcher Dr. Abdul Rahman Al-Mashhadani reiterated that economic observers have repeatedly warned of the slow rise in the dollar exchange rate in the parallel market, pointing out that its stability above the 150 mark has become so commonplace that no one is talking about its fluctuations or putting a limit on them.
Al-Mashhadani told Al-Sabah: “The slow rise in the exchange rate in recent months seems acceptable,” stressing that economists were not surprised by its increase. Up to 160,000 dinars.
Al-Mashhadani explained that government procedures such as the application of the ASYCUDA system and the prepayment of tax and customs deposits prompted many traders to move from the official system to the unofficial system, noting that in 2023 when the exchange rate was more than 164 thousand dinars, the government and the Central Bank sought to facilitate the procedures for obtaining dollars for small companies and small traders by organizing their business represented by a shop lease contract and registering the company with the Registrar of Companies or in the Federation of Industries or a Chamber of Commerce ID and import invoices for the last six months, an account is opened for him and he is allowed to transfer monthly, so the demand for the dollar decreased and the price decreased in the parallel market and sometimes reached 139 thousand.
Al-Mashhadani noted that after the recent government measures, a considerable number of traders turned to buying dollars from the parallel market and transferring funds through exchange companies to finance import operations. He explained that the importing trader outside the Central Bank system has the option of registering his imported goods either on the ASYCUDA system or using the old estimation method, which is cheaper because he will deal with a customs broker. This has led to an increase in demand for dollars in the parallel market and a rise in its price.
The spokesperson confirmed that rumors spread by some officials and members of parliament about the central bank's intention to change the currency, remove zeros, and lower the exchange rate prompted some to quickly convert part of their money into dollars. He added that the closure of the Strait of Hormuz and the halt or decrease in oil exports caused a drop in revenues. In dollars.
Urgent | In response to the rising dollar exchange rate, the Central Bank of Iraq reassures the local market: Starting Sunday, several measures will be implemented to meet foreign currency needs.
An informed source stated on Thursday that the Central Bank of Iraq will begin, starting next Sunday, to expand the scope of import financing and increase the support provided to banks, in line with actual commercial needs.
The source said the move aims to facilitate financing for necessary imports and accommodate a wider range of commercial goods, noting that the central bank continues to monitor market developments and take the necessary measures to ensure the smooth flow of foreign trade financing and meet the legitimate demand for foreign currency.
The Central Bank of Iraq settles the dollar debate: Foreign reserves are sufficient, and the rise in the market is a result of speculation.
The Central Bank of Iraq confirmed that it has sufficient foreign reserves to meet the demand for foreign currency, in a message aimed at reassuring the markets in conjunction with the rise in the dollar exchange rate in the local market and increasing talk about the possibilities related to the availability of the US currency during the next stage.
In a statement regarding the adequacy of foreign reserves, the bank explained that its reserves are capable of meeting demands related to financing foreign trade, settling payments for bank cards, as well as providing cash dollars to travelers at the approved official exchange rate.
The Central Bank’s stance comes at a time when the Iraqi market has witnessed a rise in the dollar exchange rate in the parallel market, coinciding with news and predictions regarding the future of foreign currency flows to Iraq and the impact of geopolitical developments in the region on the local market.
According to the Central Bank, the rise in the exchange rate in local markets is not due to a shortage of foreign reserves or a halt in financing legitimate dollar demands, but rather is linked to speculation and expectations in the markets, in addition to what it described as the misuse of geopolitical conditions in the region with the aim of disrupting economic and financial conditions and taking advantage of the state of anxiety in the market.
This means that the central bank clearly distinguishes between the official dollar exchange rate and the mechanisms for providing it through approved banking channels, and the movements in the exchange rate in the parallel market, which are more subject to levels of supply and demand, speculation and expectations.
The bank also confirmed the continuation of financing foreign trade through official and approved channels, ensuring the continuation of import operations and meeting the needs of the Iraqi market for goods and commodities.
This point is of particular importance given the concerns that usually accompany a rise in the dollar's price about the possibility of its impact on the prices of imported goods and materials, as the bank seeks through its statement to emphasize that the channels for financing foreign trade are still ongoing, and that the foreign reserve is able to cover the eligible requests for foreign currency.
The statement also carries a direct message to the market and citizens not to deal with undocumented news that speaks of a shortage of dollars or changes in its financing mechanisms without referring to official data.
The Central Bank of Iraq called on citizens to rely exclusively on data and information issued by it and not to be swayed by news circulating from unreliable sources, with the possibility of submitting complaints, reports and inquiries through the bank’s official website.
The statement comes at a sensitive time for the Iraqi market, as the bank’s confirmation of the adequacy of foreign reserves and the continuation of financing for trade, cards, and travelers represents a direct response to concerns about the ability of the Iraqi financial system to meet official demand for dollars.
Thus, the central bank places the rise in the parallel market within the framework of speculation, expectations, psychological and geopolitical factors, and not within the framework of a crisis in foreign reserves or an official halt in meeting the demand for the US currency.
“Iraq Seeks Balanced Ties With US,” Finance Minister Says
At a Glance
- Iraqi Finance Minister Faleh al-Sari met with U.S. Chargé d’Affaires Steven Fagin in Baghdad.
- Talks covered bilateral relations and ways to strengthen economic and financial cooperation.
- Sari urged U.S. oil and energy companies to accelerate projects in Iraq.
- Fagin described the Iraqi government delegation’s July visit to Washington as “very successful.”
Iraqi Finance Minister Faleh al-Sari met with U.S. Chargé d’Affaires Steven Fagin to discuss strengthening economic and financial cooperation and accelerating American investment projects in Iraq.
Al-Sari said Iraq’s foreign relations are guided by its national interests, while calling for balanced ties with Washington based on shared interests.
Key Statements
“Iraq’s engagement in its relations with various countries is based on the country’s higher interests.”
— Iraqi Finance Minister Faleh al-Sari
“We are keen for Iraq’s relationship with the United States to be balanced and based on the shared interests of both countries.”
— Iraqi Finance Minister Faleh al-Sari
“We call on American companies operating in the oil and energy sectors to accelerate the implementation of their projects in Iraq.”
— Iraqi Finance Minister Faleh al-Sari
“The visit was very successful.”
— U.S. Chargé d’Affaires Steven Fagin, referring to the Iraqi government delegation’s July visit to Washington
Economic Cooperation
According to Iraq’s Finance Ministry, the meeting reviewed bilateral relations and ways to expand economic and financial cooperation between Baghdad and Washington.
Sari urged U.S. companies active in Iraq’s oil and energy sectors to move more quickly with their projects, saying greater investment would support foreign capital inflows and the development of vital sectors of the Iraqi economy.
The meeting also focused on building on the outcomes of the Iraqi government delegation’s visit to Washington in July.
Fagin described that visit as “very successful” and stressed the importance of using its results as a foundation for further cooperation between the two countries.
Iraq’s Foreign Relations
Sari emphasized that Baghdad’s engagement with different countries is based on Iraq’s national interests. He also said the government seeks a balanced relationship with the United States centered on mutual interests.
The comments come as Iraq continues to pursue foreign investment and economic partnerships while seeking to strengthen its energy sector, attract international companies and expand economic cooperation with major partners.
FYI
The meeting links Iraq’s broader economic priorities with its strategic relationship with Washington, particularly in the energy sector, where U.S. companies have a longstanding presence. Accelerating investment projects could carry significance for Iraq’s oil and energy development, while Baghdad’s emphasis on balanced relations reflects its stated approach of maintaining economic and diplomatic ties with multiple international partners.
Iraq calls on American companies to expedite the implementation of their projects.
On Saturday, Iraqi Finance Minister Faleh Sari called on American companies operating in the oil and energy sectors to expedite the implementation of their projects in the country, thereby boosting foreign investment and supporting the development of vital sectors.
This came during his meeting with the US Chargé d'Affaires to Iraq, Steven Fagin, and his accompanying delegation, where relations between the two countries were reviewed, and ways to enhance economic and financial cooperation were discussed.
Sari confirmed in a statement received by Shafaq News Agency that Iraq’s actions in its relations with various countries are based on the country’s supreme interests, noting the Iraqi government’s keenness to ensure that its relationship with the United States is balanced and based on the common interests of the two countries.
For his part, the US Chargé d'Affaires described the visit of the Iraqi government delegation to Washington last July as very successful, stressing the importance of investing in and building upon the results of the visit, in order to strengthen the paths of cooperation between the two countries.
Iraqi Prime Minister Ali al-Zaidi visited the United States on July 13, and the five-day visit witnessed the signing of 48 agreements, memoranda of understanding, and partnership declarations between Iraqi and American institutions in the oil, energy, electricity, industry, technology, communications, finance, agriculture, education, and health sectors, with a declared value exceeding $60 billion.
The Federal Reserve is to blame... Parliamentary Economy Committee discusses the rise in dollar prices in local markets
Safaa al-Jabri, a member of the Parliamentary Committee on Economy, Trade, and Industry, confirmed on Saturday that one of the reasons for the rise in the dollar exchange rate on the parallel market is the decrease in the amount of funds transferred to Iraq from oil revenues. He explained that the amount transferred last month reached $500 million, after having been around $1 billion.
Al-Jabri told the Information Agency, "The rise of the dollar on the parallel market is a result of pressure on the markets, as Iraq used to consume about $1 billion monthly, and the funds came through transfers related to oil sales revenues. However, the US Federal Reserve sent only about $500 million last month."
He added, "The reduction in the amount of transferred funds led to a rise in the dollar exchange rate and prices in the market, as a result of increased demand for foreign currency against a decrease in its supply, which was reflected in market activity and prices."
Al-Jabri indicated that "this is a temporary situation and is subject to change. It can be resolved within a period not exceeding ten days, if the flow of funds returns to normal."
He explained that "the relevant authorities are working to address the issue through discussions between Iraq and the United States, with the aim of ensuring the transfer of funds needed by Iraq to cover its daily requirements and enhance the stability of the local market."
An economist identifies four reasons for the dollar's rise and calls on the central bank to take urgent measures.
On Saturday, economist Dirgham Muhammad Ali identified the real reasons behind the new rise in the exchange rate of the dollar against the Iraqi dinar, while calling on the Central Bank to take urgent measures to control the parallel market and inject hard currency.
Mohammed Ali told Al-Maalomah News Agency that "the current rise is due to a number of direct and indirect reasons, most notably the tightening of US sanctions on Iran, which has caused an increase in demand for the dollar to finance direct trade."
He added that "among the other reasons is the decision to reduce the exchange quota for travelers from (3000) dollars to (2000) dollars, which led to a shortage of cash supply in the parallel market as a result of patients and tourists turning to it to complete their needs for foreign currency."
Mohammed Ali continued, “The third and important factor is the withdrawal of Al-Taif Bank, which was a vital gateway for the entry of dollars through the Western Union network,” noting at the same time that “the fourth reason may be a deliberate and planned process of raising the exchange rate to achieve huge profits for unpunished banks.”
The Central Bank was urged to conduct a genuine review of the mechanisms for injecting dollars into the market; otherwise, the sharp rise in the exchange rate will continue, harming the citizens.
Iraqi Lawmaker Links Dinar Slide to Reduced Dollar Shipments
Iraqi lawmaker Daner Abdulghafar says reduced dollar shipments, lower Central Bank sales and security uncertainty are adding pressure to the dinar.
The last $500 million cash shipment from the US Federal Reserve to the Central Bank of Iraq arrived on Aug. 6, according to Iraqi lawmaker Daner Abdulghafar, who says dwindling dollar supply, reduced Central Bank sales and uncertainty over armed-group disarmament are contributing to the dinar's latest decline.
Abdulghafar, a member of the Iraqi Parliament's Finance Committee, told Kurdistan24 that much of the Aug. 6 shipment had already been used to meet salary needs, travel expenses and foreign remittances, leaving only a limited amount available.
His comments come as the dollar has climbed sharply across Iraqi markets. Over the past week, the price of $100 has risen by almost 10,000 dinars.
On Saturday, Kurdistan24 correspondent Azar Farouq reported the dollar at 159,350 dinars per $100 in Erbil, while the rate in Baghdad had moved above 160,000. The dollar had stood at 158,000 dinars when currency exchanges closed on Thursday.
The widening gap has put renewed attention on how physical dollar supplies, Central Bank sales and political expectations interact in Iraq's parallel currency market.
Abdulghafar warned that another layer of uncertainty surrounds the Sept. 30 deadline for armed groups to surrender their weapons. He said there was a risk that the Federal Reserve could restrict dollar shipments if the process failed.
That possibility remains contested.
Earlier Kurdistan24 reporting cited two Iraqi government sources who said Washington had warned that monthly dollar transfers could be suspended unless Iran-aligned armed factions disarmed by Sept. 30.
A senior adviser to Prime Minister Ali Faleh al-Zaidi later rejected that account. Mazhar Mohammed Saleh told Kurdistan24 that the reports were "rumors," saying Washington had not formally raised a plan to halt dollar shipments over the disarmament deadline.
Abdulghafar's latest warning therefore adds to the concern surrounding future dollar flows without resolving the conflicting accounts over whether Washington has formally tied them to Sept. 30.
Economic expert Ahmed Jaff told Kurdistan24 that the market is also responding to wider regional and political pressures.
Jaff said Washington had warned that countries helping Iran could face economic sanctions and argued that this had added to anxiety over Iraq's exposure to possible financial measures.
He also pointed to continued resistance by two groups within what he described as the "resistance front" to surrendering their weapons, saying that uncertainty has fed expectations in the currency market.
Jaff said Prime Minister al-Zaidi was expected to travel to the United States within two days to discuss the situation. He argued that a security agreement emerging from such talks could ease pressure and help bring the dollar lower.
The supplied reporting does not establish the details of any prospective agreement or confirm what measures Washington might take.
The latest figures follow two weeks of steady dollar gains.
Farouq reported earlier Saturday that economic specialists were linking the rise to regional tensions, armed-group activity and changing expectations among traders. Information circulating rapidly through WhatsApp and Telegram groups has also influenced market sentiment, while incomplete trader registration with the ASICO system has been identified as another source of pressure.
The political sensitivity of the issue is heightened by the structure of Iraq's dollar access. Previous Kurdistan24 reporting has noted the important role of the US financial system in the movement of dollars into Iraq, meaning any disruption or tightening can quickly become a source of market concern.
For now, the clearest evidence is in the exchange shops: the dinar has weakened sharply, cash dollar availability has become a focus of debate, and traders are closely watching both Central Bank supply and the political decisions expected before the end of September.
With security negotiations, disarmament questions and coalition-related decisions converging around the same period, Iraq's currency market is likely to remain sensitive to both confirmed policy changes and rumors about what may come next.
Citizens complain about high prices and declining purchasing power, demanding market regulation and accountability for those manipulating prices.
The high prices of goods and food have exacerbated the living burdens on citizens, with the rise in the dollar exchange rate and the decline in their ability to secure their daily needs.
Citizens said that rising prices are draining family incomes and imposing additional burdens on them, given stagnant salaries and the increasing cost of living.
This has forced families to reduce their basic purchases. They have called on the government to regulate the markets, prevent the exploitation of the rising dollar to raise prices, and hold manipulators and speculators accountable.
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Sherwan Dubardani: Dollar smuggling continues... and Washington is moving towards imposing strict sanctions if the factions are not disarmed.
Shirwan Dubardani, a member of the Security and Defense Committee in the Iraqi Parliament, confirmed that dollar smuggling operations from Iraq are still ongoing and have not been fully controlled by the authorities. At the same time, he warned that failure to comply with the decision to restrict weapons to the state and withdraw them from armed factions by the end of this month will expose Iraq to severe US financial and economic sanctions.
During his appearance on Kurdistan 24, Doberdani explained that the phenomenon of foreign currency smuggling is complex and difficult to fully control, as is the case in various countries around the world. He pointed out that the recent decisions and measures issued by Washington, including the inclusion of several Iraqi companies and individuals involved in money laundering on the sanctions list, constitute conclusive evidence of the persistence of this phenomenon.
Warnings of sanctions and the September 30 deadline
The MP stressed that the US administration is dealing seriously and decisively with the issue of controlling armed factions and outlaw groups, emphasizing that if the Iraqi Prime Minister's decision to collect weapons and bring them under state control by September 30 is not implemented, Washington will immediately begin imposing financial and economic sanctions on the country. He added that this deadline places the Iraqi government under immense pressure both domestically and internationally.
Market volatility and exchange rate fluctuations
In analyzing the reasons for market turmoil and the rise in the dollar exchange rate against the dinar, Doberdani explained that the problem involves a complex interplay of political and economic factors, including regional escalation and tensions, particularly in the Strait of Hormuz, as well as obstacles related to oil exports and the mechanisms for receiving dollar shipments from the United States.
He added that the Iraqi government needs about 10 trillion dinars monthly to cover employee salaries and operating expenses, noting that the difference between the official dollar exchange rate and its price in the parallel market imposes a deficit and significant financial burdens on the general budget.
The member of the Security and Defense Committee concluded his statement by saying that the Central Bank of Iraq will not be able to easily control the markets in the next few days, given that the public and economic circles are waiting to see what will result from the understandings between Baghdad and Washington after September 30, and whether Iraq will reach an agreement or slide into a new wave of economic sanctions.
Fears of sanctions and speculation are driving the dollar up against the Iraqi dinar.
The Economic Observatory "Eco Iraq" reported on Saturday a rapid rise in the exchange rate of the US dollar against the Iraqi dinar in the parallel market. The observatory indicated that several factors are behind the current surge, including fears of potential US sanctions against Iraq.
In a statement, the observatory explained that "the current rise is not linked to a single factor, but rather results from the interplay of several economic, financial, and psychological factors." It further stated that "among the most prominent of these is speculation in the parallel market, which is active from time to time, taking advantage of the increased demand for dollars and the decreased supply." The
statement added that "concerns and speculations related to the post-September 30th deadlines, discussions surrounding the issue of restricting weapons to the state, and talk of potential US sanctions or measures" are also contributing factors. The observatory clarified that "this increases uncertainty in the market and pushes some traders to increase their demand for dollars." The Economic Observatory explained that "another reason is the periodic decline in confidence in the banking sector, which is an additional factor in the increased demand for the dollar," pointing to the crisis at Al-Taif Bank and the Central Bank of Iraq's imposition of receivership on it on September 3.
In conclusion, the Eco-Iraq Observatory called on the Central Bank of Iraq to "closely monitor developments in the exchange market and take appropriate measures to curb speculation and maintain market stability, thereby contributing to strengthening confidence in the Iraqi dinar and the banking sector."
Eco Iraq Identifies Factors Behind Rising Dollar Exchange Rate
The economic platform says a combination of economic, financial, and psychological factors is driving the rapid rise in the dollar's value against the Iraqi dinar on the parallel market.
Eco Iraq, an economic platform, said on Saturday, that the rapid rise in the dollar's value against the Iraqi dinar on the parallel market is being driven by a combination of economic, financial, and psychological factors, with concerns over possible US sanctions against Iraq among the most prominent.
In a statement, Eco Iraq said that “the rise in the dollar's value is not linked to a single factor, but rather results from the combination of several economic, financial, and psychological factors.”
It identified commercial speculation, or “monopolization,” in the parallel market as one of the most prominent factors, saying such actors become active from time to time and benefit from increased demand for dollars and limited supply.
The platform also pointed to concerns and expectations surrounding developments after Sept. 30, including discussions over state control of weapons, as well as talk of US sanctions or anticipated measures, saying these factors are increasing uncertainty in the market. This situation is prompting some traders to increase their demand for dollars.
Eco Iraq said declining confidence in the banking sector is another factor contributing to increased demand for the dollar. In this context, it referred to the Taif Bank crisis and the decision of the Central Bank of Iraq on Sept. 3 to assume oversight of the bank.
Eco Iraq called on the Central Bank of Iraq to closely monitor developments in the foreign exchange market and take the necessary measures to limit commercial speculation and maintain market stability, in a way that would help strengthen confidence in the Iraqi dinar and the banking sector.
September 30th is approaching... and Al-Zaidi is hiding a card that his opponents have not yet seen!
Analysis: Trump will not meet with a prime minister who broke his promise... and Baghdad is off the New York agenda
The surprise that Prime Minister Ali al-Zaidi may bring to New York, in a possible meeting this week with Donald Trump, could be more than just a fleeting encounter.
The apparent setback in the dismantling of armed factions in recent weeks may not mean the plan is over.
It could simply be a political maneuver before the government's September 30th deadline.
In Baghdad, sources close to the matter speak of the possibility of a more confrontational plan resurfacing.
This plan might include arrests of those who refuse to surrender their weapons, while the government denies that there is a final deadline for negotiations.
The surprise may emerge in New York.
The Iraqi government has stated that Prime Minister Ali al-Zaidi will meet with US President Donald Trump on the sidelines of the UN General Assembly meetings this week.
According to sources close to the government who spoke to Al-Mada, al-Zaidi may bring with him to New York a renewed commitment to the deadline for restricting weapons to the state.
But the question preceding the meeting is whether al-Zaidi has actually backed down from the plan to dismantle the factions, or whether the positions have been misinterpreted.
Qasim al-Araji, al-Zaidi's advisor, says there is no final deadline for resolving the discussions regarding weapons control.
In his latest statement, al-Araji denied the rumors circulating about a set timeframe for the work of the weapons inventory committee, saying that this was "completely untrue," and emphasizing that "there is no specific deadline for the state to consolidate weapons under its control."
However, al-Araji's statement can be interpreted in two ways, according to what Al-Mada learned from sources close to the matter.
First, that the discussions with the factions might conclude before September 30th, a scenario that seems unlikely given the ongoing disagreement over the very idea of surrendering weapons.
Second, that the government has indeed set September 30th as a final deadline, which could be extended for a short period, but during this time, no action will be permitted without al-Zaydi's approval, and other measures will be taken immediately upon any violation, as happened in the Maysan case.
Three committees... and three deadlines for weapons:
In al-Araji's recent statements, the outlines of a government committee negotiating with the factions emerge for the first time, in addition to the Shiite framework committee, which began with three parties and then expanded to four.
In a televised interview, al-Araji, a former national security advisor and a leader in the Badr Organization, which opposes the use of force against the factions, stated that the committee negotiating with the factions operates under the direct supervision of the Prime Minister.
This confirms, according to available information, the existence of at least three negotiating channels.
The first is the Shiite framework committee, which includes Nouri al-Maliki, Mohammed al-Sudani, and Hadi al-Amiri, and was later joined by Humam Hamoudi.
The second is a parliamentary committee led by Adnan Faihan, the Deputy Speaker of Parliament and a leader in Asa'ib Ahl al-Haq.
The third is a governmental committee headed by al-Araji himself.
However, the three committees do not necessarily operate in unison.
Qais al-Khazali, the leader of Asa'ib Ahl al-Haq, was excluded from the first committee, despite being one of the leaders of the framework.
According to sources close to him, he had a different opinion regarding the weapons issue and is attempting to implement it through Faihan. Each party seems to have different parameters for what could be termed "the end of the weapons issue."
Proposals range from a few weeks to four years. This divergence is where the problem lies: who truly has the power to resolve the issue?
The government says one thing, the framework discusses another, and Parliament has a different vision, while the armed factions still refuse to move from dialogue to surrendering their weapons.
Al-Araji goes even further. He says that when weapons are completely in the hands of the state, anyone who retains weapons outside the state will be treated as a terrorist.
The plan hasn't disappeared; it has simply faded from view.
Aqeel Abbas, an academic and political analyst, told Al-Mada that there is a general feeling of backtracking on the original agenda—the dismantling of the factions—but he says the issue is not yet resolved.
He explains that the original plan relied on the judiciary, through Judge Faiq Zaidan, in cooperation with Al-Zaydi, and the use of the Counter-Terrorism Service to arrest those who refuse to surrender their weapons if arrest warrants are issued against them.
But what has changed, according to his analysis, is not necessarily Al-Zaydi's position alone, but rather the framework's stance on the plan.
He says there are indications that the framework had given initial and preliminary approval to it before backtracking, especially after the visit of Iranian Parliament Speaker Mohammad Bagher Ghalibaf to Baghdad.
From that moment, the approach to dealing with weapons began to gradually change. From "disarmament" to "storage," then to "regulation."
The factions engaged in dialogue but refused to surrender their weapons.
Even this point remains unresolved. Among the proposals are transferring some weapons to Iran, storing them in faction-owned depots, or placing them in special storage facilities within the Popular Mobilization Forces.
The disagreement isn't solely about location. Another question arises: will the storage include all weapons, or only heavy weapons and ballistic missiles?
Then came the attacks on Saudi Arabia, which presented al-Zaidi with a new political opportunity.
The government dismissed security officials in Maysan, revealed the drone launch sites, and closed the border with Iran.
Al-Araji confirmed the accuracy of the Saudi information, despite conflicting narratives pointing to Israel, Ukraine, and even Somalia.
According to sources who spoke to Al-Mada, these measures "turned" public opinion around, transforming al-Zaidi from a prime minister whom Shia forces were attempting to "block" into a figure leading the investigation into the source of the attacks.
Meanwhile, in anticipation of a potential clash after September 30, Shia forces began exploring the formation of a "leadership council" to organize and oversee the state.
According to sources, this council would effectively diminish the role of the government and its prime minister.
One source described the move as "targeting the constitution, Ali al-Zaidi personally," and the agreement reached between the US and Iraq.
What if this retreat is temporary?
For Abbas, the real question is not whether the plan has changed, but whether al-Zaidi himself has backed down.
If this is the case, Abbas believes the prime minister's political future will be severely impacted.
He estimates that US support for al-Zaidi will cease, and his position could be reduced from prime minister to merely a "director-general" for those who wish to keep him in power. Alternatively, it could open the door to his dismissal or resignation, triggering a competition for the position.
Maliki wants him, Sudani wants him, and others do too, according to Abbas.
The government's recent actions were interpreted in political circles as a retreat from the disarmament process.
The slogan that appeared on state television and was later removed, comparing the surrender of weapons to the preservation of life, along with the push to legislate the Popular Mobilization Forces (PMF) law, were two indicators of a softening in the government's rhetoric.
This coincided with high-level Iranian visits to Baghdad, most notably those of Mohammad Bagher Ghalibaf and Esmail Qaani, commander of the Quds Force.
The framework began to speak of the need to consider the "feelings of the factions," as Maliki stated, while Amiri reiterated that a clash would not occur. According to sources close to the government, Amiri may have been relying solely on this assumption. Subsequently
, the language shifted from disarmament to storage, and then organization. The factions, for their part, engaged in dialogue without agreeing to surrender. Now, the issue has reached New York, and if Zaidi meets with Trump, he may have an opportunity to reaffirm the date—according to sources close to the government—which has been repeatedly postponed in Iraqi discourse. However, even the meeting itself is not as certain as it is being discussed in Baghdad. Kato Saadallah, an expert on Iraqi-American affairs, told Al-Mada that UN meetings are usually packed, and that the US president will be busy meeting with leaders of several countries. He noted that the White House confirmed Trump's meeting with the leaders of Saudi Arabia, Qatar, Bahrain, and the UAE to discuss the Iranian issue and the repercussions of war, while, according to him, no lengthy meeting with the Iraqi prime minister was announced. Saadallah expects the meeting, if it takes place, to be brief; perhaps a greeting or a quick chat.
Al-Zaidi might ask Trump for more time or an extension on the disarmament file, citing the ongoing negotiations with the factions. However, he believes that the importance of this file to Washington may diminish after the withdrawal of US forces from Iraq, and that future developments will depend more on what the Trump administration does regarding Iran: will it head towards a new round of war, or a last-minute agreement?
According to Saadallah, al-Zaidi's visit this time will not be like his previous one, and there may be American displeasure with the lack of progress on the factions file, as well as on the anti-corruption file. Al-Zaidi had promised, publicly, that September 30th would be the last day for the factions. Saadallah says that Trump initially gives opportunities to those who make promises, but the situation could change if those promises are not fulfilled.
A short meeting... and a long message . Abbas, on the other hand, doubts the narrative that downplays the importance of the meeting. If the meeting does take place, he says, it will greatly strengthen al-Zaidi's position and may push him to adhere even more firmly to the original agenda. "I believe a meeting with Trump will not happen without American trust or an American understanding that the agreed-upon plan will be implemented," Abbas says. He adds, "There will be no meeting with a prime minister who broke his promise to the Americans."
New Iraqi Prime Minister Aligns With Washington
Washington Report on Middle East Affairs, October 2026, pp. 73-74
Waging Peace
SINCE PARLIAMENTARY elections late last year, Iraqi politicians have engaged in fraught negotiations to form a new government. In April, those negotiations culminated in the country’s Coordination Framework alliance selecting businessman Ali al-Zaidi as prime minister. On July 9, 2026, experts shared insights into the situation during a virtual panel co-hosted by the Arab Center Washington DC and Georgetown University’s Center for Contemporary Arab Studies.
Renad Mansour, deputy director of Chatham House’s Middle East and North Africa Program, predicted that President Donald Trump’s personal compatibility with al-Zaidi would inform future relations between Washington and Baghdad. “There is a kind of hope that there could develop a bromance between al-Zaidi and Trump, like what happened with [Syrian President] Ahmed al-Sharaa and Trump,” he said.
However, Iraqi politicians “are terrified of the U.S.,” he said. Already, Trump rejected former Iraqi Prime Minister Nouri al-Maliki’s bid to retake the premiership, prompting al-Maliki to leave the race. Washington influenced Baghdad’s new government formation by threatening to make its full release of the country’s vital oil revenue (which has been held in New York since the 2003 U.S. invasion) contingent on a candidate favorable to Washington being named prime minister.
According to Mansour, al-Zaidi is intent on winning Washington’s favor. To this end, the new prime minister has launched an anti-corruption campaign. However, Mansour suggested that the campaign is both self-serving and an attempt to appease Washington. “Corruption is the political system” in Iraq, he argued. The government awards contracts to businesses, and a “whole new sort of patronage networks of corruption develop” between the government and businesses. Most business contracts are government contracts, so there is no true private sector, according to Mansour. “To play politics means you have to play corruption.” Anti-corruption campaigns “clear out your predecessor,” he added.
Popular unrest remains common in Iraq, Mansour said. “Al-Zaidi has [faced] a protest almost every day,” he noted. “There have been many, many protests. They’re often local, they’re often sectoral,” with exceptions such as the doctors’ syndicate that attempted to demonstrate on a national scale.
Even so, it is “unlikely” that protests will succeed, according to Rutgers University associate professor Zahra Ali. She explained that Baghdad effectively structurally suppresses popular movements, in part because the electoral system only permits large parties to gain representation in parliament. That prevents popular movements, which do not form large parties, from gaining representation.
In addition to anti-corruption, one of al-Zaidi’s other major goals is the daunting task of “integrating and demobilizing Iraq’s militias and armed groups,” according to Mansour. Al-Zaidi set a Sept. 30 deadline for integration and demobilization—but the Coordination Framework has already delayed this deadline.
While Shi’i leaders Muqtada al-Sadr and Qais al-Khazali have expressed approval for this process, Shi’i groups linked to Iran—Kataib Hezbollah and Harakat al-Nujaba—have rejected the notion.
According to Lahib Higel, senior analyst for Iraq at the International Crisis Group, the “resistance groups...have clearly made their case that they won’t lay down arms until the Americans have left.”
“The Americans have essentially said, ‘Get rid of these groups,’ but not provided a roadmap,” Higel explained. “Nor have the Iraqis from what I can tell.”
According to Mansour, the issue is: “Is al-Zaidi ultimately willing to go to war with these groups?” Higel does not believe there will be an “inter-Shi’i war” over disarmament. “I think that we’re quite far away from that type of scenario,” she shared.
Al-Zaydi orders that government officials be prevented from appearing in the media without prior approval.
On Saturday, Prime Minister Ali al-Zaidi directed that all advisors and government officials be prohibited from making press statements or appearing in the media without prior approval from his office.
The directive confirmed that the ban includes visual, audio and print media, noting that the measure comes within the framework of compliance with regulatory controls and keenness to unify the government discourse and ensure consistency in the official message.
Al-Zaydi stressed the need to adhere to this directive in order to avoid statements that may not accurately reflect the official position of the state, calling on everyone to strictly adhere to this directive.
A member of parliament demands the government send the laws on the Popular Mobilization Forces, oil and gas, and the salary scale to parliament: "Delay is unacceptable."
: The head of the National Statement Alliance and member of Parliament, Abdul Amir al-Mayahi, affirmed the existence of several priority laws that cannot be postponed within Parliament, urging the government to expedite their submission for enactment.
Al-Mayahi stated that "the Popular Mobilization Forces Law is a very important law, and the government must submit it," noting that the Oil and Gas Law is also among the important laws awaiting Parliament.
He added, "There was a request from the government in the previous session to submit the Oil and Gas Law, but it was not submitted,"
emphasizing the necessity of moving forward with this matter.
Regarding the salary scale, al-Mayahi explained, "We are also waiting for the government to address the salary scale to ensure fairness for state employees and achieve equality," indicating that this issue is of great importance given the continuous demands from employees and the Iraqi people for the adoption of a unified salary scale. He added, "There are numerous demands and voices from employees and the Iraqi people constantly calling for a salary scale," urging the government to finalize the related procedures and submit it to Parliament. He noted that "the previous government started but did not complete it," calling on the current government to "finalize the remaining aspects of the salary scale and send it to Parliament."
Al-Mayahi reiterated the importance of the oil and gas law, while also pointing to other laws, including the recovery law, as well as the settlement and recovery law and the establishment of a settlement fund, which he said the government is serious and eager to submit to Parliament.
Depletion of foreign currency reserves and withdrawal from US bonds: The risks of an oil paralysis present Iraq with difficult choices.
Iraq witnessed a sharp decline in its foreign reserves, amounting to $16.8 billion over seven months, reaching $80.6 billion by the end of July 2026. Iraq also disappeared from the list of major holders of US Treasury bonds. According to experts, this contraction is due to the collapse of oil exports, increased logistical costs, and changes in investment portfolio management. To compensate for the deficit, several options are emerging, ranging from reducing government spending and implementing austerity measures, to resorting to external borrowing, or addressing domestic monetary issues.
Reserves declined
Kaldo Ramzi, a member of the Parliamentary Committee on Economy, Industry and Trade, told Al-Alam Al-Jadeed on Sunday (September 20, 2026) that “the decline in Iraq’s foreign reserves deserves to be followed up and its causes investigated precisely, after it decreased from about $97.4 billion at the end of 2025 to $80.6 billion at the end of July 2026, which is about $16.8 billion and a percentage exceeding 17 percent.”
He adds, “The decline in reserves does not automatically mean there is a problem or misuse, as it is affected by oil revenue flows, foreign trade financing, transfers, asset movement, foreign investments, and portfolio redistribution. But the most important thing is to know the components of the decline and its causes, and whether it is temporary or represents a trend that requires additional economic and monetary measures.”
Parliamentary follow-up
Ramzi affirms that “the Committee on Economy, Industry and Trade will follow up on the matter in conjunction with the Parliamentary Finance Committee, and will listen to the Central Bank regarding the reasons for the decline in reserves, the movement of assets and foreign investments, changes in the investment portfolio and its management mechanisms, within the oversight role of the House of Representatives and with respect for the independence of the Central Bank.”
He stressed “the need to avoid giving unfounded signals that could cause concern in the market, after the Central Bank confirmed that it has sufficient reserves to meet the demand for foreign currency to finance foreign trade, bank cards, and travelers’ requests at the official rate.”
Dollar and Dinar
At the end of 2025, the foreign reserves of the Central Bank of Iraq amounted to about $97.432 billion, before declining to $86.175 billion by the end of June 2026, and then to $80.633 billion by the end of July, a decrease of $16.799 billion over seven months, and a percentage of approximately 17.2 percent.
In dinars, the value of reserves decreased from 126.661 trillion dinars at the end of 2025 to 112.027 trillion dinars in June, and then to 104.823 trillion dinars in July. Central bank investments also declined from 93.266 trillion dinars to 81.998 trillion, and then to 75.034 trillion dinars during the same period.
The decline extended to the cash reserves held in the central bank's vaults, which fell from 1.907 trillion dinars at the end of 2025 to 614 billion dinars in June, and then to 124 billion dinars in July. In contrast, gold reserves rose slightly from 29.415 trillion dinars in June to 29.665 trillion in July, but remained below the end-of-2025 level of 31.488 trillion dinars.
Treasury bonds
Regarding Iraq’s absence from the list of the largest holders of US Treasury bonds, Ramzi explains that “the amount of $40.8 billion recorded at the end of 2022 included long-term and short-term US government securities, and it is not accurate to consider it an amount that disappeared simply because Iraq did not subsequently appear on the list of major holders. Therefore, its absence means that its holdings have fallen below the limit shown in the table.”
It is believed that “what is required is to know whether part of these securities has been sold or matured, where the funds were reinvested, and how the distribution of the investment portfolio has changed. Otherwise, redistributing assets is a natural part of managing reserves. The most important thing is to know the size of foreign investments, their distribution, their returns, their risks, and the extent to which they meet the standards of safety, liquidity, and return.”
Data from the US Treasury Department for July 2026 showed that Iraq was absent from the list of major holders of US Treasury bonds, while Saudi Arabia and the UAE were the only two Arab countries on the list, with holdings of $142.4 billion for Saudi Arabia and $110.1 billion for the UAE, compared to $142.5 billion and $114.8 billion respectively in June.
Saudi Arabia came in seventeenth place and the UAE in nineteenth, while Japan topped the list with $1.1039 trillion, followed by the United Kingdom with $998.3 billion, then China with $618 billion, while total foreign holdings amounted to $9.2481 trillion in July.
Dollar rise
Regarding the rise in the dollar's price in the parallel market, a member of the parliamentary economic committee believes that "the decline in reserves does not necessarily mean a rise in the exchange rate in the parallel market by the same percentage, as the market is affected by the volume of demand for foreign currency, transfers, unregulated trade, speculation, regional conditions, and the efficiency of the banking sector in absorbing legitimate demand."
He adds that “the Central Bank attributes the recent rise to speculation, expectations, and exploitation of geopolitical conditions, while financing foreign trade continues through official channels, while the Economic and Financial Committees are monitoring the level of reserves, foreign investments, transfer mechanisms, and the reasons for the gap between the official and parallel exchange rates.”
Cash management
Ramzi emphasizes that “protecting the reserve is not limited to managing the demand for the dollar, but requires building an economy capable of attracting investment and producing a larger portion of what it consumes. The government’s directions in supporting the private sector, attracting investments, and stimulating projects can increase production, job opportunities, and diversify sources of income if they are transformed into actual projects and capital.”
He concludes by saying: “The standard is not the size of the announced agreements and investments, but rather what actually turns into projects, production and job opportunities within Iraq, and that the sustainability of the reserve requires sound monetary management and institutional oversight, in parallel with a more productive and diversified economy that is less dependent on oil and imports.”
Reasons for the decline
For his part, economist Karim Al-Hilou told Al-Alam Al-Jadeed on Sunday that “Iraqi reserves declined during the recent crisis and the American-Israeli war on Iran, and Iraq was the biggest loser as a result of the decline in its ability to export oil, as it used to export about four million barrels per day, before the exported quantities decreased to about one hundred thousand barrels.”
He adds, “This decline is linked to several factors, most notably the high costs of tankers and insurance due to the war, as well as Iraq not owning its own oil tankers, since a Chinese oil tanker with a capacity of one million tons costs about $150 million. So we wonder about the reasons why Iraq has not turned to buying its own tankers.”
Al-Hilu points out that “the Sultanate of Oman offered to store Iraq’s oil in its facilities, which have a storage capacity of up to 200 million, but Iraq did not send its oil to be stored in those areas.”
He adds, “The decline in oil revenues has prompted Iraq to resort to its cash reserves, especially since oil represents about 90 percent of the state’s resources, in the absence of other exports that could constitute an alternative resource.”
Possible solutions
Regarding possible solutions, the economist believes that “one of the available options is to address the crisis from within, as the government can print 30 trillion dinars of the new Iraqi currency without this leading to inflation, given the size of government funds and those circulating among citizens.”
He continues, “Resorting to external loans from the World Bank and the International Monetary Fund is another option. These loans can support the Iraqi reserve and provide dollars on good terms and over long periods, which is important for strengthening reserves from abroad.”
He believes that “the solutions available to the government consist of a set of paths, the most prominent of which are managing internal resources, external borrowing, controlling local revenues, in addition to austerity, which is the most important option at the present stage.”
Special salaries
Al-Hilu points out that austerity is a fundamental solution to support the Iraqi economy, calling for a review of spending on salaries, allowances, factions, and state institutions. He quoted the International Monetary Fund as saying that the Iraqi government pays about $15 billion annually in salaries to about 300,000 people of special grades and party members, some of whom receive more than one salary.
He continues, “There is significant spending on the salaries of other categories, in addition to the large numbers of people affiliated with factions within state institutions, the army, protection networks, contracts, and other institutions. These expenses are draining the state’s resources.”
He emphasized "the importance of controlling local revenues, noting that improving their collection could provide significant resources for the state and help cover salaries." He also pointed out the existence of approximately 550,000 employees on what he termed "the hourly wage system," criticizing the continued expenditure on these salaries for years.
Dollar storage
Regarding the rise in the dollar's price, expert Al-Helou explains that "the procedures related to the platform, the complexity of transactions, and the bureaucracy have pushed some of the dealers to return to the parallel market, and the crisis of Al-Taif Islamic Bank and the delay in funds created a state of anxiety that prompted some citizens to convert what they had of dinars into dollars, which led to an increase in demand for it."
He asserts that “large quantities of dollars are held by entities within the country that possess millions of dollars, and the entry of these funds into the market or their withdrawal from it contributes to the movement of the exchange rate up and down.”
He warns that “the continuation of these conditions will affect the purchasing power of citizens and lead to a decline in demand for goods, especially with the increase in fees and financial burdens, which exacerbates the pressures on markets and consumers.”
Al-Helou concludes his remarks by saying: “Reforming the financial sector requires great efforts, and successive governments over the past 25 years have failed to address a number of these issues, which has led to an accumulation of problems, corruption, and financial losses.”
Thus, the first seven months of 2026 combined a decline in reserves of about 17.2 percent, a decrease in the central bank’s investments and cash holdings, and Iraq’s absence from the list of major holders of US bonds, so the issue moved from the size of the declining funds to how assets are managed and redistributed and the impact of this on the sustainability of reserves and monetary stability.
The 2027 budget is facing comprehensive parliamentary scrutiny... Al-Shammari: No crises will hinder its approval
Member of Parliament’s Finance Committee, Mohammed Al-Shammari, confirmed on Saturday that the draft general budget law for 2027 will be subject to intensive technical study and detailed auditing as soon as it is officially sent by the Ministry of Finance and the government to the House of Representatives, noting that the existence of prior political understandings will contribute to its smooth passage without complex disputes.
Al-Shammari told Al-Maalouma News Agency that "the arrival of the budget to Parliament will begin with the Finance Committee's work of reviewing all schedules, allocations, and expenditure items accurately to ensure their suitability to the economic reality and the needs of service projects," indicating that "the auditing and study process represents an indispensable oversight and legislative duty before it is put to a vote."
He added that "subjecting the draft to in-depth study does not mean obstructing it, as the political climate is conducive and the parliamentary blocs are determined to finalize the necessary technical amendments through a swift consensus." He predicted that "the reading and discussion procedures will proceed to approval without any crises or conflicts that might hinder its completion within the parliament."
The dollar fuels post-September 30th fears... Speculation and potential sanctions put pressure on the Iraqi dinar.
The Iraqi exchange market has entered a new phase of tension as the end of September approaches, after the selling price of the dollar in some Baghdad markets exceeded the 160,000 dinar mark for every 100 dollars on Saturday, September 19, 2026, in a movement that reflects the widening gap between the official price and the parallel market, and the rising demand for the US currency amid a state of economic and political uncertainty.
The rise comes in conjunction with the monitoring by the “Eco Iraq” Observatory of an acceleration in the prices of the dollar, attributing this to a set of overlapping factors that cannot be reduced to one reason, foremost among them speculation and the high demand for the dollar, in addition to fears related to what may happen after September 30 and the increasing talk about the possibility of imposing American sanctions or taking new financial measures.
The price movements of recent days indicate that psychological factors have become a clear influence on the market. On September 14, the Al-Kifah and Al-Harithiya exchanges recorded a rate of approximately 156,500 dinars per 100 dollars, before prices gradually increased, reaching levels approaching or exceeding 160,000 dinars in Baghdad exchange bureaus this past Saturday.
This rapid move does not necessarily mean a change in the official exchange rate of the dinar, as the central bank's official policy remains separate from the parallel market exchange rate. The central bank also denied, last June, rumors circulating about a change in the dinar's exchange rate and warned against relying on documents or news not issued through its official channels.
The market is buying dollars in anticipation of the unknown.
The main problem at the current stage is that the market does not necessarily wait for the decision to occur in order to react to it, but rather begins to price in its probabilities in advance.
With increasing talk in recent days about the issue of restricting weapons to the state, the future of the relationship between Baghdad and Washington after the end of September, and the possibility of expanding sanctions related to financial networks dealing with Iran, some traders, speculators, and liquidity holders have begun to hedge by increasing demand for the dollar.
This type of demand is not entirely related to an actual commercial need for foreign currency, but also includes what can be described as "fear demand"; that is, buying dollars in anticipation of its future rise.
The more expectations spread that the dollar might rise further, the more people want to buy it, and the expectations themselves become an additional factor pushing the price upwards.
September 30th: A political date that becomes a factor in the currency market
Concerns are particularly focused on September 30, due to its connection with sensitive political and security issues being discussed in Iraq, especially the issue of weapons control and the future of the security relationship with the United States.
The newspaper Al-Akhbar, in a report published on September 18, quoted a recent Iraqi government official regarding American messages and the possibility of using economic tools if no progress is made on the weapons control file. However, the same report indicated that the Prime Minister's financial advisor denied the existence of any currently declared American plan to halt dollar shipments due to the file not being completed by September 30.
Here, a distinction must be made between a political possibility that is being discussed and an official, declared American decision.
As of September 19, 2026, no official announcement appears in the public data reviewed by the U.S. Treasury Department specifying September 30 as the date for cutting off dollar shipments to Iraq or imposing comprehensive economic sanctions on the Iraqi state.
But Washington is already tightening its measures against networks it considers linked to Iran or assisting sanctioned entities. On September 10, the US Treasury Department announced new measures against networks it said support Kataib Hezbollah and Hezbollah and help Iran circumvent sanctions.
This means that market concerns are not entirely unfounded, but at the same time they do not constitute evidence of a comprehensive or automatic US decision that will be issued on September 30.
Al-Taif Bank brings the trust file back to the forefront
Another factor that puts pressure on customer behavior is trust in the banking sector.
On September 3, the Central Bank of Iraq announced the imposition of guardianship over Al-Taif Islamic Bank for Investment and Finance.
Following growing concern among depositors, the central bank confirmed that imposing receivership does not mean the bank is bankrupt, but rather represents a precautionary supervisory measure to protect the rights of depositors and ensure the stability of banking operations.
On September 8, the Central Bank reiterated that the rights of depositors at Al-Taif Bank are protected, and that it is working with the appointed trustee to regulate withdrawals and fulfillment of financial obligations in a gradual and organized manner.
Despite these assurances, any crisis involving a bank or customer deposits could have a psychological impact on the market, especially in an economy where a large portion of transactions and liquidity are kept outside the banking system.
When confidence declines, some money holders tend to hold onto cash dollars as a hedge, which increases demand for them in the parallel market.
Speculators get involved
The role of speculation is no less important than the political factor.
The rapid rise in prices creates an opportunity for speculators to buy and resell the dollar, anticipating continued appreciation. With increased demand, price movements may begin to deviate from fundamental economic factors and become driven, for a time, by expectations, rumors, and the behavior of traders.
Therefore, the mere spread of unconfirmed news about “cutting off dollars to Iraq” or “sanctions after September 30” may prompt some traders to buy, even before verifying the news.
In this case, the market is faced with a recurring cycle:
Spreading fears drives up dollar purchases, increased demand raises the price, and the rising price reinforces the belief that there is a dangerous development, so new buyers enter the market.
Can the dollar continue to rise?
The course of events in the coming days will largely depend on the news and official decisions that will be issued from Baghdad and Washington, in addition to the ability of the Central Bank of Iraq to manage the demand for foreign currency and contain speculation.
If no broad new US measures emerge, and concerns related to the period after September 30th subside, it is possible that some of the precautionary demand for the dollar will decrease.
However, if new sanctions are imposed on Iraqi financial institutions, companies, or networks, or if restrictions on dollar transactions are expanded, pressure on the parallel market may increase, especially if this is accompanied by widespread speculative activity.
But it is also important to distinguish between sanctions that target specific individuals, companies, or banks and any action that affects Iraq’s access to the dollar as a country; these are entirely different levels of action and should not be treated as one thing.
The central bank faces a confidence test.
The current battle is not only related to the volume of dollars in circulation, but also to confidence.
The market needs clear and quick messages that reduce the space for rumors and clarify the truth about what is happening regarding foreign transfers, dollar shipments, and any changes that may occur in the banking system.
Conversely, continued conflicting news and a lack of quick clarifications may give speculators more room to move the market.
Between the potential sanctions, the post-September 30 obligations, and the crisis of confidence that appears from time to time in some banks, it seems that the dollar in Iraq is not only pricing in the current realities, but also in the fear of the next scenario.
Therefore, the question the market is watching now is not just: What is the price of the dollar today?
But what will happen after September 30th?
The answer, so far, has not come in the form of a decisive official decision from Washington or Baghdad, while the market has already preempted everyone and begun pricing in the fears.
