The gap between Iraq’s official exchange rate and the parallel market rate for the dinar started to grow in mid-December 2025, before settling down in early March 2026. This mainly reflects changes in import demand and new customs rules.
Economic analyst Ahmed Tabaqchali explained in his latest report that the gap widened because more importers were looking for US dollars in the parallel market. Many of them were struggling to get dollars through official channels.
There were two main reasons behind this. First, informal importers found it hard to complete cross-border payments at the official rate. Second, new customs reforms made things more complicated. These included switching from a fixed fee system to a value-based tariff system, and linking access to foreign currency with the customs platform.
The new tariff system, although approved years ago, was only put into action at the start of 2026. It raised costs on some imports. To deal with that, some traders chose to buy dollars from the parallel market instead.
The gap between the two exchange rates kept growing until early March, then stopped widening and began to stabilize. This could mean the market is adjusting to the new system, or that government steps helped ease the pressure. It might also be linked to lower import activity بسبب regional disruptions, including issues affecting trade through the Strait of Hormuz.
Even with tensions in the region, there are no clear signs that ordinary people rushed to buy dollars out of fear. That suggests there hasn’t been panic or large-scale movement of money out of the country.
