Iraq devalues currency by record against dollar as economy wilts

Updated on Dec 19, 2020 09:33 PM IST

The central bank reduced the official rate to 1,450 dinar per dollar, the first devaluation since 2003, it said in a statement.

Prime Minister Mustafa Al-Kadhimi, who came to power in May, has warned that the government will struggle to pay civil servants without raising more debt.(AP)
Prime Minister Mustafa Al-Kadhimi, who came to power in May, has warned that the government will struggle to pay civil servants without raising more debt.(AP)
ByBloomberg | Posted by Shivani Kumar

Iraq devalued its currency by about 20% against the dollar, the biggest cut on record, as the cash-strapped government faces an economic crisis brought about by low oil prices and crude-production cuts.

The central bank reduced the official rate to 1,450 dinar per dollar, the first devaluation since 2003, it said in a statement. That’s from about 1,190 previously. Dollars will be resold to local banks at 1,460 dinar apiece.

The embattled nation’s central bank is taking the steps to avoid depleting its foreign-currency reserves, with the government last month seeking upfront payments in exchange for a long-term crude-supply contract.

Prime Minister Mustafa Al-Kadhimi, who came to power in May, has warned that the government will struggle to pay civil servants without raising more debt.

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