Iraqi Dinar to USD Forecast 2025-2027

Iraqi Dinar to USD Forecast

The Iraqi Dinar (IQD) is expected to remain relatively stable against the US Dollar (USD) through 2025. The exchange rate is likely to stay within the range of IQD 1,307 to 1,318 per USD, based on Iraq’s oil revenues, the Central Bank of Iraq’s managed exchange rate policy, and geopolitical factors.

Why this matters

The IQD is pegged to the USD via a managed exchange rate system, with limited fluctuations in the short term. Despite the managed peg, various economic, geopolitical, and monetary factors can still affect the exchange rate. By forecasting the performance of the Iraqi Dinar, we help traders understand potential risks and opportunities in the market.

How will the Iraqi Dinar perform in 2026 and 2027

In 2026, the exchange rate for IQD/USD could slightly appreciate or depreciate, with projections ranging between IQD 1,300 and 1,330 per USD. By 2027, a more significant change could occur, with rates potentially fluctuating between IQD 1,280 and 1,350 per USD, depending on Iraq’s oil sector performance and political reforms.

Current Rate & Recent Performance

USD to IQD exchange rate as of October 23, 2025, at 1,307.7590. The data indicates a slight decline of 0.018% over the past year, with minor fluctuations in the exchange rate, as seen in the chart’s volatility.

• Exchange Rate Stability: The IQD appears to be maintaining a stable range, staying between 1,270–1,310 IQD per USD over the past year, with periodic spikes and dips.
• Low Volatility: The fluctuations are relatively minor, which indicates that the rate is likely influenced by managed policies from the Central Bank of Iraq, rather than dramatic market forces.
• Current Rate: As of the latest data point, 1,307.7590 IQD per USD is the prevailing exchange rate, highlighting the continued stability of the IQD.

What Drives the IQD/USD Exchange Rate?

Understanding the forecast means understanding the levers behind IQD value.

Oil Revenues and Government Budget

Iraq’s economy remains heavily oil-dependent: crude oil exports account for over 90% of export revenues. Higher oil production, higher global oil prices and effective revenue management strengthen foreign reserve levels and may support a stronger IQD (or a stable peg). Conversely, a drop in oil prices or production disruptions weaken the fiscal position, reducing FX reserves and putting pressure on the IQD.

Central Bank Policy & Exchange Rate Regime

The Central Bank of Iraq maintains a managed exchange rate rather than allowing full floating. That reduces volatility but also caps large revaluation. Monetary policy, foreign reserve levels, and the CBI’s ability to defend the IQD are therefore key.

Political Stability, Reforms and External Pressures

Political instability, corruption and security issues remain major risks in Iraq. These affect investor confidence and currency stability. External factors like sanctions, banking restrictions, dollar‐liquidity issues. For instance, in February 2025, five Iraqi banks were banned from USD transactions to curb money-laundering. Economic diversification and institutional reforms (e.g., digital payments, improved banking oversight) can gradually improve the outlook.

Liquidity & Market Accessibility

The IQD is thinly traded in global forex markets. Liquidity is limited, which raises risk for speculative flows. Many “dinar revaluation” narratives come from speculative forums rather than credible economic backing. The understanding of this risk is critical.

Investment & Trading Implications

When considering the Iraqi Dinar (IQD) to USD exchange rate, several key factors come into play that affect both short-term trading and long-term investment. Given the managed nature of the IQD exchange rate by the Central Bank of Iraq (CBI), there are unique opportunities and risks for traders and investors.

Low Volatility & Stable Range:
The IQD is not a highly volatile currency. As shown in the recent chart, the exchange rate remains fairly stable, fluctuating between 1,270 and 1,310 IQD per USD over the past year. Forex traders who prefer trading in stable, low-volatility markets may find the IQD appealing for range-bound trading strategies.

Managed Exchange Rate:
The CBI’s policy of maintaining a fixed exchange rate, rather than allowing the IQD to float freely, provides a stable trading environment. However, this also means that large price swings or sudden shifts in the exchange rate are unlikely without significant external shocks (e.g., drastic oil price changes or political instability).

Risk of Speculation:
Traders looking for quick gains based on major currency swings should exercise caution. The IQD is not typically subject to significant speculative-driven movements like more liquid currencies. Therefore, attempting to capitalize on minor fluctuations could involve unnecessary risk due to lower market liquidity.

Liquidity Considerations:
The IQD is less liquid than major currencies, which could result in wider spreads for forex traders. This means the cost of executing trades could be higher, especially for larger positions, making it a less efficient currency for high-frequency or large-scale trades.

Key Risks for Both Traders and Investors

Oil Price Fluctuations:
As Iraq’s economy is heavily reliant on oil exports, any global changes in oil prices can have an immediate effect on the IQD’s strength. A fall in oil prices could place significant downward pressure on the Dinar, while higher oil prices can provide support for the currency.

Political and Security Risks:
Iraq continues to face challenges from political instability, regional conflicts, and issues of governance. Any escalation in conflicts or internal strife could undermine investor confidence, resulting in a sell-off in the currency and a weakening of the IQD.

Central Bank Policies:
The Central Bank of Iraq’s intervention plays a major role in determining the value of the IQD. While the CBI aims for stability, any sudden changes in monetary policy, such as tightening or loosening the currency peg, could impact exchange rate stability and create unexpected volatility.

Liquidity Issues:
The lack of a robust foreign exchange market for the IQD means that liquidity can be limited, making it challenging for large investors or traders to enter or exit positions without facing slippage or wider spreads.

Conclusion

The Iraqi Dinar (IQD) offers a unique trading opportunity for forex traders seeking a low-volatility, stable currency with a managed exchange rate. Based on the current exchange rate and market dynamics, the USD/IQD pair is expected to remain in a stable range between 1,307 and 1,318 IQD per USD through 2025, with minimal fluctuations.

In summary, the IQD is a stable currency suitable for low-risk, range-bound trading strategies. Forex traders should focus on managing risks due to liquidity constraints and take advantage of small fluctuations in the exchange rate. As long as Iraq’s political and economic situation remains stable, there are opportunities for traders who are disciplined in their approach and able to navigate the forex market’s unique challenges with the IQD.