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By John Lee.

The Central Bank of Iraq (CBI) has announced completion of the principal phase of its comprehensive reform programme for commercial, Islamic and foreign bank branches operating in Iraq.

According to the Bank, all Iraqi banks have submitted the required documentation under the "minimum requirements" framework, selecting one of three pathways:

• Continuing in the market as independent banking institutions;
• Merging with other banking institutions;
• Exiting the market.

The submissions enable the Central Bank to assess each institution's compliance with minimum reform standards. Over the coming months, banks are expected to address any identified gaps and work towards full compliance.

The Central Bank also announced a new initiative aimed at expanding the capacity of private banks to support international trade. Banks meeting specified criteria under Central Bank evaluation will be permitted to resume cross-border transactions and issue letters of credit in multiple international currencies, including:

• Euro;
• UAE dirham;
• Chinese yuan;
• Jordanian dinar.

The Bank said the move forms part of its broader strategy to strengthen confidence in Iraq's financial sector, enhance global integration, and support sustainable economic growth.

See also:

IQD in the Crossfire: What a Trump-Iran Conflict Could Mean for Iraq's Dinar

Iraqi Banks Restricted from US Dollar Transactions: FULL LIST [Amended]

CBI on Banking Reform, "Digital Dinar", Dollar Transactions ...

IMF Pushes Reform of Iraq's Banking System

Iraq announces Major Banking Sector Overhaul

(Source: Central Bank of Iraq)

The following were the ten most read dinar-related articles on Iraq Business News for the month of January:

1. 2026: The Year Iraqi Dinar Speculators Finally Strike Gold?
2. Iraqi Dinar "Plummets Against Dollar"
3. One Year of Trump: Iraqi Dinar Speculators Still Waiting
4. Donald Trump and the "Great Iraqi Dinar Revaluation"
5. The Iraqi Dinar Revaluation Deception: 10 Persistent False Claims Exposed
6. 10 Things the CBI Said About the Iraqi Dinar in 2025
7. Iraqi Dinar Prospects: Reality Check After Six Months of Trump
8. 8 Things the IMF Said About Iraq and the Dinar in 2025
9. Iraq Reviews Measures to Improve Sovereign Credit Rating
10. CBI Instructions for Exchanging Dinars

The previous month's listing can be viewed here.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

By John Lee.

US President Donald Trump has warned that Iraq would face serious consequences if Nouri al-Maliki were to return as Prime Minister.

In a statement posted on Truth Social, Trump said that Iraq had experienced instability and economic decline during Maliki's previous term in office. He added that, if Maliki were reinstated, the United States would withdraw its support for Iraq, which he said would undermine the country's prospects for stability, prosperity, and development.

The comments were framed as a warning against political choices that, in Trump's view, could negatively affect Iraq's future and its relationship with the United States.

Full statement from President Trump:

I'm hearing that the Great Country of Iraq might make a very bad choice by reinstalling Nouri al-Maliki as Prime Minister. Last time Maliki was in power, the Country descended into poverty and total chaos. That should not be allowed to happen again. Because of his insane policies and ideologies, if elected, the United States of America will no longer help Iraq and, if we are not there to help, Iraq has ZERO chance of Success, Prosperity, or Freedom. MAKE IRAQ GREAT AGAIN!

(Source: Truth Social)

By John Lee.

Mark Savaya, US President Donald Trump's special envoy to Iraq, has said that corruption must be tackled decisively if Iraq is to achieve stability, arguing that militias are a symptom rather than the root cause of the country's challenges.

He identified fake payrolls, fake loans, and fictitious assets as major sources of corrupt funds that must be eliminated.

Full statement from @Mark_Savaya:

If Iraq is to be fixed, corruption must be confronted first and decisively. Militias are a symptom. Corruption is the disease.

I know in detail how illicit money is channeled. It does not flow only through senior principals. More importantly, it moves through layers of lower level actors such as family members, friends, guards, drivers, and intermediaries. This structure creates insulation and deniability while keeping the system fully operational.

This is a highly complex and deliberately constructed network that has been active for more than two decades. It has successfully bypassed regulations, compliance frameworks, and international auditing mechanisms. Through this system, Iranian backed militia groups have been financially empowered, protected, and sustained.

Any serious effort to stabilize Iraq, restore sovereignty, and dismantle militias must begin with dismantling the corruption networks that finance and protect them. The sources of massive corrupt money such as fake payrolls, fake loans, and fictitious assets must stop.

Without that, every other effort will fail.

(Source: @Mark_Savaya)

By Guest Blogger. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

One Year of Trump: Iraqi Dinar Speculators Still Waiting for a Miracle That Will Never Come

As Donald Trump marks his first anniversary back in the White House on 20th January, one group of investors remains stubbornly committed to a fantasy: Iraqi dinar speculators still convinced that their fortunes will suddenly multiply a thousandfold. Many of these speculators think Trump's presence in the White House will be the catalyst for that revaluation (or 'RV', as they call it).

Twelve months of economic reality have done nothing to shake their faith, even as every metric confirms what experts have been saying all along -- there will be no massive revaluation.

The question is not whether the dinar will skyrocket in value. The question is: how much longer can speculators ignore the overwhelming evidence that their investment strategy is fundamentally flawed?

The Current Reality

As the anniversary of Trump's inauguration approaches, the official USD/IQD exchange rate remains unchanged from a year ago, while anecdotally the unofficial "street" value of the dinar has weakened a little.

While the weakening, if real, may be small, some would argue that any apparent softening of the currency indicates the general direction of travel, and that has been against the speculators.

Oil Prices Slump

Far from creating conditions for currency appreciation, Trump's first year has coincided with a marked deterioration in Iraq's fiscal position. With oil prices around $62 per barrel, Iraq's petroleum revenues, which account for more than 90 percent of total government income as of 2025, are no longer sufficient to cover planned public expenditures.

Despite a rise in recent days, Brent crude is down more than 20% since Trump regained power, and IMF estimates assume no major price increases this year.

Trump's Policies Have Made Things Worse

Rather than helping Iraq as some speculators imagined, Trump's policies have created additional headwinds. His aggressive stance towards Iran has disrupted Iraq's energy security, whilst his broader trade policies have contributed to oil price volatility.

For Iraq, caught between its dependence on Iranian energy imports and pressure from Washington, Trump's approach has created economic uncertainty rather than opportunity.

The Devaluation Risk

Perhaps most tellingly, experts are warning not of revaluation but of potential devaluation. A leading Iraqi economist has warned that Trump's pressure to reduce oil prices could harm the Iraqi economy and potentially lead to devaluation of the Iraqi dinar, according to reporting from earlier in 2025.

Iraq has precedent for currency devaluation when faced with fiscal pressure. In December 2020, amidst a collapse in oil prices, the Central Bank of Iraq devalued the dinar by 22.7 percent, changing the official rate from 1,190 to 1,460 dinars to the U.S. dollar. The current economic pressures are severe enough that another devaluation cannot be ruled out -- the exact opposite of what speculators expect.

The Psychology of Denial

What's remarkable about dinar speculation is not just the gap between expectation and reality, but the psychological mechanisms that keep believers invested despite overwhelming contrary evidence.

The psychology of dinar speculation shares characteristics with other speculative bubbles and get-rich-quick schemes, with confirmation bias leading believers to interpret any news as supporting their thesis whilst dismissing contrary evidence.

This pattern has been evident throughout Trump's first year. When the president makes any comment about the Middle East, speculators interpret it as a sign that revaluation is imminent. When oil prices rise temporarily, it's seen as vindication. When predictions fail to materialise, the goalposts simply move to the next date.

There's no economic mechanism by which a sudden, massive revaluation could occur without devastating consequences, as such a move would instantly make Iraqi goods and services prohibitively expensive, destroy the country's export competitiveness, and potentially trigger economic chaos.

The Human Cost

Beyond the economic analysis lies a more troubling reality. Some individuals have diverted substantial portions of their savings into dinars, sometimes purchasing at markups far above the official exchange rate from dinar dealers. Others have held onto their investments for years, forgoing more conventional investment strategies that might have actually generated returns.

After one year of Trump's presidency -- a period some speculators insisted would bring the long-awaited revaluation -- these investors are no closer to their dreams. The dinar has not appreciated; the promised miracle has not materialised.

What the Next Year Holds

Looking ahead, the outlook for Iraq, and therefore for the dinar, remains challenging. The World Bank projects that the current account is forecast to remain in deficit in 2025-27 and lead to a decline in the reserve to import ratio to 6.6 months in 2027.

The IMF emphasises the need for urgent measures, noting that Iraq's vulnerabilities have increased in recent years due to a large fiscal expansion, with the oil price remaining well below what is needed to balance the budget.

These projections suggest continued fiscal strain, potential further reserve depletion, and mounting pressure on the dinar to weaken, not strengthen.

The Verdict After One Year

One year into Trump's presidency, the verdict is clear: Iraqi dinar speculation remains what it has always been: a fundamentally flawed investment strategy based on economic misunderstanding and wishful thinking.

The dinar has not revalued by 1,000x. It has not revalued by 100x. It has not revalued by 10x. It has, in fact, slightly depreciated on the street. Iraq's economy faces mounting fiscal pressures, declining reserves, and an uncertain future tied to volatile oil markets.

Trump has shown no interest in Iraqi currency policy, nor would he have the power to simply decree a revaluation even if he wanted to. The mechanisms of currency valuation respond to economic fundamentals, not presidential wishes.

For speculators still holding dinars and waiting for their fortunes to change, the question must be asked: what evidence would it take to change your mind? If twelve months of deteriorating fundamentals, weakening reserves, mounting fiscal deficits, and continued absence of any revaluation haven't shaken your faith, what will?

The Iraqi dinar speculation phenomenon remains a cautionary tale about the intersection of hope, economic illiteracy, and the human tendency to cling to beliefs even when confronted with overwhelming contrary evidence. As Trump begins his second year in office, the speculators continue to wait for a miracle that economics tells us will never come.

The true revaluation needed is not of the dinar, but of the investment strategy itself. Until speculators recognise that currencies reflect economic realities rather than political fantasies, they will continue their futile wait for riches that exist only in their imaginations.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

See also:

8 Things the IMF Said About Iraq and the Dinar in 2025

10 Things the CBI Said About the Iraqi Dinar in 2025

2026: The Year Iraqi Dinar Speculators Finally Strike Gold?

Dinar Explainer 1: Why Iraq has Two Exchange Rates

Donald Trump and the "Great Iraqi Dinar Revaluation"

By John Lee.

The United States and Iraq have held discussions focused on banking reform, financial compliance, and measures to counter illicit financial activity.

According to a statement by the United States Special Envoy to Iraq, Mark Savaya, the talks involved the U.S. Department of the Treasury and the Office of Foreign Assets Control (OFAC), and addressed challenges and reform opportunities across both state-owned and private banks in Iraq.

The discussions emphasised strengthening financial governance, compliance frameworks, and institutional accountability.

The parties agreed to conduct a comprehensive review of suspected payment records and financial transactions involving Iraqi institutions, companies, and individuals linked to:

• Smuggling activities
• Money laundering
• Fraudulent financial contracts and projects
• Financing or enabling terrorist activities

Full statement from the US Special Envoy to Iraq:

Today, I met with the U.S. Department of the Treasury and OFAC to address key challenges and reform opportunities across both state owned and private banks, with a clear emphasis on strengthening financial governance, compliance, and institutional accountability.

We agreed to conduct a comprehensive review of suspected payment records and financial transactions involving institutions, companies, and individuals in Iraq linked to smuggling, money laundering, and fraudulent financial contracts and projects that finance and enable terrorist activities.

We also discussed next steps related to forthcoming sanctions targeting malign actors and networks that undermine financial integrity and state authority.

The relationship between Iraq and the United States has never been stronger than it is today under the leadership of President Donald J. Trump.

(Source: @Mark_Savaya)

The following were the ten most read dinar-related articles on Iraq Business News for the month of December:

1. CBI on Banking Reform, "Digital Dinar", Dollar Transactions
2. Iraqi Central Bank Reduces Supply of Dinars
3. 10 Things the CBI Said About the Iraqi Dinar in 2025
4. CBI Training on Detection of Counterfeit Dinars
5. CBI Chief on the Future of Financial Markets in Iraq
6. 8 Things the IMF Said About Iraq and the Dinar in 2025
7. The Iraqi Dinar Revaluation Deception: 10 Persistent False Claims Exposed
8. Donald Trump and the "Great Iraqi Dinar Revaluation"
9. CBI Instructions for Exchanging Dinars
10. CBI Denies Dinar Revaluation Rumours as Inflation Falls

The previous month's listing can be viewed here.

For more information on the Iraqi dinar, check out IBN's Dinar Page here: https://www.iraq-businessnews.com/the-dinar-page/?swcfpc=1 

By John Lee.

The US Congress has voted in both the House of Representatives and the Senate to repeal the 1991 and 2002 Authorisations for Use of Military Force against Iraq, as part of the National Defense Authorization Act for fiscal year 2026.

The repeal is awaiting ratification by President Donald Trump.

The Ministry of Foreign Affairs of the Republic of Iraq said the decision marks a fundamental shift in the legal framework governing relations between the two countries, reinforcing respect for Iraq's sovereignty and supporting a renewed strategic partnership.

The ministry added that the repeal sends a clear signal to the international community that Iraq has become a stable and secure environment for attracting investment.

Full statement from the Iraqi Ministry of Foreign Affairs

The Ministry of Foreign Affairs views with great pleasure the historic vote by the US Congress, in both the House of Representatives and the Senate, to repeal the Authorizations for Use of Military Force against Iraq of 1991 and 2002, included within the National Defense Authorization Act for Fiscal Year 2026, and awaits its ratification by President Donald Trump.

The completion of the repeal process for the abovementioned Authorizations for Use of Military Force, in place for over three decades, reflects the change in the convictions of U.S. lawmakers due to a set of domestic and external considerations. This repeal also constitutes a fundamental turning point in reshaping the legal nature of the relationship between the two countries and lays the foundation for a new framework of relations based on respect for Iraq's sovereignty and the closure of the legacy of war. It also enhances the framework of the strategic partnership and conveys to the world a message that Iraq has become an environment safe for attracting investment.

The Ministry considers that the repeal of the Authorizations for Use of Military Force does not damage counterterrorism efforts, because the 2001 Authorization for Use of Military Force, issued in response to the September 11 attacks to address the threats posed by Al-Qaeda and other associated terrorist organizations, remains in force.

The Ministry also reiterates the commitment of the Government of the Republic of Iraq to strengthening bilateral relations in a manner that contributes to building a long-term partnership, serves the interests of the two friendly countries, and supports stability in the Middle East region.

(Source: Iraqi Ministry of Foreign Affairs)

By Ahmed Tabaqchali, Chief Strategist of AFC Iraq Fund.

Any opinions expressed are those of the author, and do not necessarily reflect the views of Iraq Business News.

"Election kerfuffle, what kerfuffle !!!"

The market, as measured by the Rabee Securities U.S. Dollar Equity Index (RSISX USD Index), was up 5.0% for the month and up 11.2% for the year. Its action for the month was indifferent to the elections, and to expectations of violence or disruptions, as volumes picked up moderately. The RSISX USD index attempted a break-out of the consolidation range that it traded in since December 2024, following a blistering 35.9% three-month rally. While volumes were positive, they were not high enough to support a full break-out. Nevertheless, the market's technical picture continues to remain positive and still suggests that the consolidation phase would continue and that the likely consolidation or pullback should be within its multi-month uptrend (chart below).

Rabee Securities U.S. Dollar Equity Index and Daily Turnover

(Source: Iraq Stock Exchange, Rabee Securities, AFC Research, daily data as of November 30^th.
Note: daily turnover adjusted for block trades)

The RSISX USD Index's constituents' performance were mostly positive, with six stocks up, two stocks flat, and two stocks down. Positive performances were led by National Bank of Iraq (BNOI) and Iraqi Islamic Bank (BIIB), both up 10.3% for the month, followed by Asiaell Telecom (TASC) up 7.3%, Baghdad Soft Drinks (IBSD) up 4.5%, Bank of Baghdad (BBOB) up 2.1%, and Al-Mansour Bank (BMNS) up 0.5%. Both Baghdad Hotel (HBAG) and Al-Mansour Hotels (HMAN) were flat, while negative performances were led by Commercial Islamic Bank of Iraq (BCOI), which was down 2.9%, followed by Al-Mansour Pharmaceuticals Industries (IMAP) down 2.4%,

The parliamentary elections on November 11^th, the sixth such elections since the U.S. invasion in 2003, were mostly greeted by the market as a non-event; crucially, they were peaceful with no indications of a repeat of the political violence that followed the prior elections in October 2021. Their results, however, suggest that the processes of government formations following the elections, while unlikely to repeat the political stalemate following the 2021 elections, yet much like them would extend over many months.

The current political, societal and economic scene is very different from that of 2021; the country is enjoying the fruits of three years of solid stability and strong economic growth. However, unlike in 2021, the upcoming government does not have the benefits of the huge budget surpluses of 2021-22 that allowed the current government to introduce the expansionary three-year budget of 2023-25. The cyclical positives that supported the budget's revenues will become negatives in the different oil price environment, and thus the tailwinds of prior strong oil prices are reversing into headwinds over the next 9-12 months. Current expectations for weaker future oil prices, as measured by Brent crude prices, suggest that prices over the next two years would average 18% less than the average of the prior two years (chart below*).

Market Expectations for Future Oil Prices

As measured by Brent Futures Contracts (USD per barrel)

(Source: Investing.com, AFC Research, U.S. Energy Information Administration (EIA), as of November 28^th)

Countering these cyclical negatives are the positives of the secular transformation of the Iraqi economy, driven by the two key dynamics discussed here often in the past, the cumulative positive effects of the relative stability and structural banking developments. These are in the early stages of their transformation of the economy, a process that would unfold over the next few years, bringing with them high economic growth that would feed into higher corporate profits, and ultimately higher stock market returns. Consequently, while the positives of secular transformation of the economy should trump the cyclical negatives, these cyclical negatives would dampen the growth of non-oil GDP and corporate profits.

The interplay of the secular positives of the transformation of the economy and the cyclical negatives of the current low expectations for oil prices was the subject of two recent webinars:

• Majlis and Markets, December 1^st: "Iraq's Economy: Progress or Pressure?"
• AsharqNow, November 28^th: "The Iraqi Banking Sector: A Weak Link or a Starting Point?"

Note:

* The green line denotes actual Brent prices, the yellow line denotes current expectations of future Brent prices, while the red and grey lines denote prior expectations for future Brent prices that marked the upper and lower ranges for such expectations over the last four years.

Please click here to download Ahmed Tabaqchali's full report in pdf format.

Mr Tabaqchali (@AMTabaqchali) is the Chief Strategist of the AFC Iraq Fund, and is an experienced capital markets professional with over 25 years' experience in US and MENA markets. He is a board member of Arab Bank Iraq, a Visiting Fellow at the LSE Middle East Centre, Senior Fellow at the Institute of Regional and International Studies (IRIS), and a Senior Non-resident Fellow at the Atlantic Council.

His comments, opinions and analyses are personal views and are intended to be for informational purposes and general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any fund or security or to adopt any investment strategy. It does not constitute legal or tax or investment advice. The information provided in this material is compiled from sources that are believed to be reliable, but no guarantee is made of its correctness, is rendered as at publication date and may change without notice and it is not intended as a complete analysis of every material fact regarding Iraq, the region, market or investment.

By John Lee.

The Central Bank of Iraq (CBI) has presented detailed updates on its banking-sector reform programme, with Governor Ali Mohsen Al-Alaq outlining structural plans aimed at rebuilding a compliant and modern financial system.

Al-Alaq said the engagement of Oliver Wyman followed restrictions on dollar transactions imposed on a number of Iraqi banks, noting that the consultancy is supporting deep reforms to ensure full adherence to international standards. He added that there are reassurances regarding the gradual return of affected banks to normal operations once required reforms are completed.

All Iraqi banks have signed the reform document, the Governor confirmed. Compliant institutions will be allowed to conduct transactions in other foreign currencies through a phased approach, under close monitoring by international counterparts.

On digital transformation, Al-Alaq stated that the digital dinar project is under implementation, but requires time and robust infrastructure before launch.

He reaffirmed the Bank's commitment to price stability by maintaining low inflation through a stable official exchange rate, warning that a devaluation of the dinar would harm low-income groups and erode confidence in the currency. He stressed that the exchange rate should not be used as a tool to address structural fiscal gaps, which instead require reforms to strengthen domestic revenues, control spending, diversify the economy, and support the government's direction.

See also:

Top 10 Dinar Articles from November

IMF Explains Iraq's Exchange Rate Arrangement

CBI Denies Dinar Revaluation Rumours as Inflation Falls

(Source: CBI)