The “Iraq Future” Foundation for Economic Studies and Consultations has attributed the fluctuations of the Iraqi dinar exchange rate against the US dollar in the parallel market to a combination of internal and external factors. This analysis encompasses data from 2005 through 2024.
According to the Foundation’s findings, the Iraqi dinar has experienced significant fluctuations against the US dollar over the past 21 years, driven by various influences, including political, legislative, and economic dynamics. The primary driver of these changes has been identified as the forces of supply and demand.
The timing of these fluctuations is notably affected by seasons within the year. For instance, the launch of the public budget and key holidays in major exporting countries, such as China and Iran, create a ripple effect on the exchange rate.
A review of the exchange rate data reveals recurring patterns that indicate the dinar’s value trends vary significantly across different months. December has been noted as the month with the highest frequency of increased dinar value, showing appreciation in 13 out of the past 21 years, followed closely by August and June, which exhibited peaks in 11 instances each. April saw increases in 10 cases, while October and November showed growth in 9 occurrences, and March in 8 instances.
Conversely, the month of May recorded the least frequency of dinar depreciation, with value increases noted only 4 times during the studied period. This suggests a seasonal pattern wherein the dinar appreciates in four specific months followed by a decline in May, likely driven by increased demand.
The Foundation cautioned, however, that despite the evident seasonal impacts on exchange rates, additional factors play a crucial role. These include the Central Bank of Iraq’s dollar selling levels, which affect cash supply in the market, alongside political and financial influences stemming from the timing of public budget allocation and prevailing geopolitical conditions that can lead to sudden shifts in foreign currency demand.
In conclusion, while seasonal trends significantly influence the exchange rate in Iraq, additional aspects such as monetary policies and ongoing political and economic developments also have a direct impact on the parallel market. Therefore, carefully monitoring these variables is essential for accurately understanding and predicting fluctuations in the exchange rate.
