What Currency Is Used in Iraq?

What currency is used in Iraq?

Whether you're travelling to Iraq, exploring trade opportunities, or sending money abroad, understanding Iraq's currency is essential. This guide is written for international travellers, expats, NGOs, importers, and financial professionals seeking clear, reliable information. We’ll explain what Iraq’s official currency is, how it works, where it’s used, and how to manage it safely and effectively.

Iraq’s official currency: the Iraqi Dinar (IQD)

The official currency of Iraq is the Iraqi Dinar, abbreviated as IQD and sometimes symbolised as ع.د in Arabic. It has been in circulation since 1932, replacing the Indian rupee following independence from British administration.

Unlike currencies such as the euro or US dollar, the Iraqi dinar is not freely convertible on international markets, and it is largely used within Iraq's borders. One dinar is subdivided into 1,000 fils, although fils coins are no longer in practical use due to inflation and are now considered obsolete.

Denominations in use:

• Coins: Rarely used. In theory, 25, 50, and 100 dinar coins exist, but they are not commonly seen in circulation.

• Banknotes: 250, 500, 1,000, 5,000, 10,000, 25,000, and 50,000 dinars are commonly used.

Banknotes are issued by the Central Bank of Iraq, which is responsible for monetary policy and managing inflation.

Where the Iraqi dinar is used

The dinar is the sole legal tender across all of Iraq, including Baghdad, Basra, Erbil, Mosul, and other major regions. It is used for all government, commercial, and personal transactions.

In the Kurdistan Region of Iraq, the Iraqi dinar is also used, although US dollars are sometimes accepted informally due to cross-border trade and tourism. However, official pricing and payment is in IQD.

How the Iraqi dinar works

Iraq operates a managed exchange rate system, with the value of the dinar heavily influenced by the Central Bank and tied closely to US Dollar reserves. As of 2024, the exchange rate fluctuates around:

• IQD 1,300 to 1,500 per US Dollar, depending on economic conditions and central bank policy.

The dinar is not traded freely on global forex markets, meaning that exchange outside Iraq is highly limited. Most major currency exchange platforms do not offer IQD.

Benefits and considerations of using the IQD

Benefits:

• Stable domestic acceptance: Universally accepted for all transactions within Iraq.

• Strong oversight: Regulated by the Central Bank of Iraq, which manages inflation targets and economic liquidity.

Considerations:

• Not freely convertible: The IQD is considered a restricted currency, meaning it can be difficult to buy, sell, or exchange outside Iraq.

• Volatile black-market rates: In times of political or economic uncertainty, unofficial exchange rates may differ from the official rate.

• Cash-based economy: Iraq remains largely cash-reliant, with limited access to reliable banking in some areas.

Common misconceptions about the Iraqi dinar

One frequent misconception—especially promoted by speculative currency sellers—is that the Iraqi dinar is poised for a sudden and massive revaluation. These claims are not supported by any credible economic data or government policy. The Iraqi dinar has remained relatively stable against the US Dollar under a managed exchange system and is not expected to float or revalue sharply in the short term.

Another myth is that IQD can be easily exchanged abroad. In reality, most foreign banks and currency exchanges do not handle Iraqi dinars, making it difficult to convert outside Iraq.

Tips for managing money in Iraq

• Bring US dollars when entering the country, as they are easily exchanged into dinars at local banks and money changers.

• Use authorised exchange outlets—avoid black-market dealers, particularly in unstable areas.

• Withdraw cash cautiously—ATMs may be unreliable or unavailable outside major cities.

• Always pay in dinars unless explicitly quoted in USD (as may be the case for certain hotels or international services).

• Carry small denominations, especially when travelling outside urban areas, where change may be limited.

FAQs

Can I use US dollars in Iraq?
In some areas, particularly the Kurdistan Region, yes—especially for hotels and international businesses. However, the Iraqi dinar is required for most local transactions.

Can I exchange IQD in the UK or USA?
Generally not. Most banks and currency exchanges outside Iraq do not trade in IQD, due to its restricted status.

Is the Iraqi dinar a stable currency?
The dinar is relatively stable domestically, but its value is controlled by the Central Bank and subject to policy shifts. It’s not freely traded and carries geopolitical risk.

Is Iraq a cash-based society?
Yes. Cash is the primary method of payment for most goods and services. Card usage is limited and mostly confined to upscale establishments in major cities.

Real-life example

An NGO worker arrives in Baghdad with US$1,000. They exchange it at a licensed bureau into approximately IQD 1,300,000, based on the prevailing rate. They use cash for accommodation, food, and transport. In Erbil, they find that USD is accepted in some places, but paying in IQD gives better value. By using authorised exchange services and avoiding unofficial rates, they maintain financial security and local trust.