At least two Iraqi political groups bought large quantities of dollars on the local market before the government announced an official exchange-rate increase on October 7, with the aim of making a profit, sources told MBN.
On Wednesday, Iraq’s central bank raised the official dollar exchange rate for the first time in more than three years, setting the rate for sales to the public at 1,520 dinars per dollar. It had been fixed at 1,320 since February 2023.
The unofficial rate on the parallel market had climbed above 1,600 dinars per dollar before the announcement that the local currency would be devalued. After the new official rate was announced, the market rate jumped above 1,700 dinars per dollar.
Former Iraqi parliament member Hussein Arab told MBN that some people were buying dollars on the market just hours before the government announcement.
“Those who bought dollars on the market in the hours before the exchange-rate change was announced purchased $150 million,” Arab said. He added that “two Shiite blocs took advantage of the situation,” but declined to provide further details.
There has long been a gap between the official exchange rate and the rate used by currency-exchange offices. That gap has widened in recent months as Iraq has undergone a severe financial crisis, driven largely by falling oil exports amid disruptions in the Strait of Hormuz since the U.S.-Israeli war on Iran began in February. Last week’s decision to devalue the dinar was reached in that context.
Iraq relies heavily on foreign currency earned from oil sales to finance imports, stabilize the dinar and pay public-sector workers and pensioners, who together account for about 20 percent of a population of more than 46 million.
“All the political forces bought dollars,” said a member of one of the parties in the governing Shiite coalition, the Coordination Framework, speaking on condition of anonymity because of the issue’s sensitivity. The person pointed to the parallel-market rate, which reached 1,600 dinars to the dollar in the two weeks before the official rate change.
The Coordination Framework approved raising the exchange rate before the government adopted the measure, according to information MBN obtained from informed sources.
A person with ties to Iraq’s central bank, who requested anonymity because he was not authorized to speak publicly, told MBN that “about $500 million has been bought on Iraqi markets since last June.” The source said this suggested the decision to raise the exchange rate had effectively been made some time ago, with implementation delayed until October.
MBN contacted the central bank’s media office for comment on dollar purchases made before the exchange-rate increase was announced but had not received a response by the time this report was published.
Suspicions that some benefited from the dollar-rate increase are part of broader, recurring criticism of Iraq’s political system. For years, government contracts, border crossings and currency auctions have been the subject of allegations that political influence was used for financial gain.
The allegations come in a country where tackling corruption remains one of the main challenges to governance. Iraq scored 28 out of 100 in Transparency International’s 2025 Corruption Perceptions Index, ranking 136th out of 182 countries and territories.
The index measures perceptions of public-sector corruption among experts and businesspeople, reflecting the continuing challenges Iraq faces in strengthening integrity and accountability across state institutions.
Former Communications Minister Mohammed Tawfiq Allawi said in an interview on MBN’s “Baghdad Hour” program that some of those who bought dollars belonged to forces involved in the political process and had advance knowledge of major decisions.
He added that many parties held, in his words, “staggering sums from stolen funds,” enabling them to buy dollars ahead of decisions and profit from the currency’s rise.
The potential to profit from information circulating about exchange-rate decisions is not limited to political forces.
Salam Smaysim, a former adviser in the Iraqi Cabinet’s General Secretariat, told MBN that Iraq had seen the same scenario play out during previous dollar crises. Those who benefited were only politicians but also some participants in the currency auction.
Smaysim said the dynamic falls under what is known as “expectations theory”: Anyone who hears the rumor, even an ordinary speculator or currency trader, can buy dollars and sell them after the decision is issued, pocketing the difference.
Adapted and translated from the original Arabic.
