Iraq devalues its dinar as the US-Iran war shuts Hormuz and forces costly overland oil reroute

From the Newshound archive · first published 7 October 2026.

Iraq's central bank has slashed the value of the dinar, moving the official exchange rate from roughly 1,300 to 1,500 dinars to the dollar after the US-Iran war choked off Strait of Hormuz oil shipments. Baghdad's cabinet approved the change overnight, citing "financial, economic and monetary requirements" — diplomatic language for a crisis forcing Iraq to reroute oil expensively overland through Syria. The unofficial market rate had already surged past 1,600 dinars before the announcement and jumped further to more than 1,700 afterwards.

Iraq's economy depends overwhelmingly on oil exports, most of which previously moved through the now-disrupted Strait of Hormuz.

The overland Syria route that Baghdad has fallen back on is both more expensive and less efficient, squeezing government revenues hard.

Iraqi consumers buying dollars through banks will now pay 1,520 dinars to the dollar — a stark sign of how far the US-Iran war's economic shockwaves are reaching beyond the battlefield.