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IQD: The Currency of the New Babylon

Abu Dhabi plugged Iraq's stock market into a $1 trillion network, settling in IQD. Baghdad admits trade has slowed. Kataib Hezbollah asks to start over.

Thursday, October 1. Iraq marks Sovereignty Day this morning with the coalition gone and the world's press still filming the soldiers. This channel covered the soldiers on Monday. The news that matters to you as an IQD holder came out of Abu Dhabi on Tuesday.

The Abu Dhabi Securities Exchange rang a bell that day and switched Iraq's stock market into its cross-border trading network. 103 Iraqi companies, valued at $21.7 billion, now sit inside a network holding over $1 trillion in listed value and 11 million registered investors. One short phrase in the announcement matters more than the rest of it: settlement in local currencies.

One of the Gulf's biggest markets has agreed that Iraqi shares bought through its platform settle in Iraq's own money, and it did so in the week the coalition left. So today we ask the question that follows, and we will tell you simply where the facts stop and our opinion starts. Is the IQD being built to become the money the Middle East trades in?

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Let's start with what was actually switched on. The platform is called Tabadul, Arabic for exchange. Abu Dhabi launched it in July 2022 so that a broker in any member market can trade shares listed in another, without the company listing twice and without a separate custodian holding the paper. Iraq is the eighth market to go live on it, beside Abu Dhabi, Bahrain, Muscat, Kazakhstan and Armenia. 11 exchanges have signed up in all.

For an Iraqi investor, shares listed in Abu Dhabi can now be bought from a desk in Baghdad. For everyone else it runs the other way. Two Iraqi brokerage firms already hold licences from the Emirates' market regulator to trade on the platform, and investors across the network can reach Iraqi banks and telecoms through brokers they already use. Abu Dhabi's exchange chief, Abdulla Salem Alnuaimi, said it this way:

"Bringing the Iraq Stock Exchange onto Tabadul gives investors a clear, straightforward path to trade Iraqi companies while expanding Abu Dhabi's role as a trading center."

Ali Jamal Amin, who runs the Iraq Stock Exchange, called the bell "an important milestone in strengthening cooperation and integration between the Iraqi and Abu Dhabi capital markets." None of it was sudden. Both exchanges and Iraq's securities regulator signed the agreement in April 2025, and Baghdad's regulator has since written the rules that let foreign brokers apply to trade on its exchange.

Now the phrase we flagged. Trades on the platform settle in local currencies, and shares in Baghdad are priced in IQD. A fund in Abu Dhabi that wants a piece of an Iraqi bank cannot pay in dollars and walk away. Somewhere in that chain its money has to become IQD and sit in an Iraqi settlement account. That last step is our reading of how the platform's own terms apply to Iraq, and we mark it as ours.

Is the IQD Being Built to Lead the Region?

Here the facts end and our opinion begins, and we will keep the two apart.

Facts first, and you have read every one of them here during September. Iraq Invites America's Banks had al-Zaidi in New York, asking American lenders into his market. Dollars Before the Barrels had Chevron agreeing to pay for crude before it ships. In Paris, the Rothschild advisory house took a meeting on lifting Baghdad's credit rating, and TotalEnergies raised its commitment to $16 billion. A Sovereign IQD recorded Europe's development bank paying for a Baghdad bank's correspondent lines. 6 Million Barrels a Day carried the demand to OPEC and the 10 million target for 2030. And No Extension had the Development Road, north to Turkey, written into a joint statement with Ankara.

Now add Tuesday. A Gulf exchange has plugged Iraq's market into its own and agreed to settle Iraqi trades in IQD.

Our opinion is this. Read as a list, those look like separate stories. Read together, they are the parts a country needs before its neighbours do business in its money: lenders, an oil major paying in advance, a rating adviser, a development bank, a bigger oil quota, a trade route, and now a market link.

Could the IQD become the dominant currency of the Middle East? Today the region's strongest money belongs to its smallest states. Kuwait's dinar is the highest-valued currency unit in the world, and it serves a country of about 5 million people. Iraq has 46 million, roughly 145 billion barrels of proven oil, and a land route from the Gulf's ports toward Europe under construction. And it has been here before. In 1959 the IQD stood at $2.80, among the highest-valued units on earth.

What Iraq has lacked is what Kuwait has: neighbours and lenders who trust its books. That is the gap every item above is closing. So our answer is yes, that is the direction of the work, and no, we cannot tell you it will be finished. We hold it as opinion until the CBI publishes a number.

Keep your feet on the floor with this one. A stock exchange link does not set an exchange rate. Nothing in Abu Dhabi's announcement names a rate, promises one, or mentions the CBI. Iraq's whole listed market is worth about 2% of the network it just joined, and the first trades will be small.

Here is what the link does do. It gives foreign money a regulated road into IQD assets that did not exist last week. Until Tuesday, a Gulf investor who wanted Iraqi shares had to go through a broker in Baghdad and find a reason to trust the arrangement. Now the trade runs through his own broker, under his own regulator.

Careful money does not build a road like that into a currency it expects to sit at 1,310 for good. That sentence is our read, not Abu Dhabi's. The rate itself stays the CBI's to publish, on a morning it chooses.

Baghdad Admits the Slowdown

On Wednesday a government source gave the state news agency a statement built to steady nerves. Buying and selling in Iraq's markets has slowed, the source said, and the government knows it. It named the effect on citizens, traders and business owners, and said it is working on measures to get activity moving, protect purchasing power and strengthen confidence in the market. It blamed the war next door first. A closed strait. Dearer shipping. Dearer insurance. All of it, the source said, has fed a mood of waiting.

Then it turned to the other thing Iraqis are waiting on: the news, analysis and rumour about changing the currency and deleting the zeros. In the agency's Arabic, our translation:

"Putting any proposal forward for study or discussion does not mean approving it or starting to implement it immediately."

The source went on to explain the thing itself. Deleting zeros means re-expressing money in a new unit, with prices, salaries, savings and debts converted at the same ratio, and it "does not in itself mean reducing the real value of citizens' money." That distinction matters, the statement said, so the debate does not become a source of anxiety that affects daily dealings or pushes people into hasty decisions. No decision has been taken. Anything approved will be announced officially, with its details, before it begins.

Regular readers know this file. Iraq to Remove the Three Zeros from the IQD set out why deleting zeros changes the label and leaves the value where it was. Denial or Blueprint showed the bank describing a transition period in the same statement as a denial. What is new is the admission underneath. A government tells its public to stay calm about a currency change only when that public has already started acting on one.

Baghdad's street agrees. The dollar finished Wednesday at 157,000 IQD per $100 in the capital, down from 157,500 on Tuesday, its first dip this week, against the bank's posted 131,000. No arrival has been reported for the cash dollars promised last Saturday. And from this morning importers pay their customs duties before their transfer leaves the bank. A trader who is short of dollars, paying duties up front and waiting to hear what happens to the currency does not hurry to restock his shelves.

The Holdout Asks to Start Over

Yesterday, in Pensions for Weapons, we left Kataib Hezbollah threatening to shoot down aircraft and bring down the government. On Wednesday, the day the coalition's mission ended, its secretary-general, Abu Hussein al-Hamidawi, published something different. All armed groups, he said, "must halt all military operations and mobile logistical activities." He kept one exception, for "targeting hostile aircraft violating the country's airspace," until the government's own air defenses are in place. On the weapons talks with al-Zaidi he said no conclusion had been reached before the deadline, and then this:

"It is better to start over to produce a solid agreement that safeguards everyone's rights."

Read it carefully, because this is no surrender. He called the existence of armed groups beside the state's forces a good thing, and the umbrella his faction sits under said it is bound by no timetable. But a faction that orders its own side to stop operating, and asks the Prime Minister for a fresh agreement, has stopped saying no and started asking what yes would cost.

Muqtada al-Sadr went further the same day. He dissolved the Promised Day Brigade, renamed his Mahdi Army as a foundation, and called for a public programme to put every weapon in the state's hands. In Washington, Foreign Minister Fuad Hussein said the government's draft plan to restrict weapons to the state is written and will be presented "in the coming days."

The weapons gate did not close on Wednesday. It moved, on the first day the coalition was no longer there to blame.

Washington, Tehran and the Dollar

A correction we owe you. Yesterday we wrote that neither the Pentagon nor the White House had marked the mission's end. Hours after we published, both did. The Pentagon's spokesman, Sean Parnell, called the departure from Erbil the "successful conclusion of the military mission that defeated ISIS in Iraq." Trump followed, announcing that "the last American Forces are leaving Iraq" and that the country has "a wonderful new Prime Minister, Ali al-Zaidi, somebody I supported from the beginning and fully endorsed." Baghdad counted the withdrawal complete on Sunday. Washington counted it on Wednesday. We carry both.

One thing stayed behind, and it is the account. Iraq's oil income is still paid into the New York Fed, under an order renewed by every president since 2003. 23 Years in Baghdad explains how that came to be.

Next door, Trump told reporters he has a decision to make on Iran: "We blow them up or make a deal. But the time is coming. It's going to end very soon, one way or another." Tehran says it has received Washington's formal reply to its 7-day ceasefire proposal. Out on the water the blockade tightened: Central Command has now redirected 125 commercial vessels since mid-July. Iran's rial is past 2.5 million to the dollar. The Treasury added this week's names too, 10 buyers of weapons parts for Iran's defense ministry under Operation Economic Outcast, and amended its Venezuela licenses again on Monday.

The cost of borrowing dollars rose again. America's 30-year yield reached 5.63%, its highest since June 2002, even as August inflation came in softer than forecast at 3.4%. Gold sat near $4,159.

The Read

Some of the oldest banking records ever found were pressed into clay in Babylon, about 85 kilometers south of where Baghdad stands today.

Archaeologists hold around 1,700 tablets from one Babylonian family, the Egibi, covering five generations of business from about 600 to 482 BC. Loans. Deposits. Financing for shipments of barley and dates. More than 1,000 years before that family, the law code of Hammurabi had already capped the interest on a silver loan at 20% a year. And the unit all of it was counted in, the shekel, a fixed weight of silver, was a measure merchants used across the ancient Near East.

No army gave Babylon that place. Traders from other cities chose to count in its unit because its records could be trusted to hold. Every regional currency since has been built the same way: outsiders agree to settle in your money once they believe your books.

Now look at what you have watched Iraq do. Audits. Bank seizures. Tellers trained. Salaries moved onto cards. Customs duties paid before the dollars move, starting this morning. Each of those was Baghdad making its books believable to people who do not live there. On Tuesday an outside market with a trillion-dollar network gave its answer: Iraqi trades, settled in IQD.

Is the IQD the currency of a new Babylon? We think that is where this is heading, and we have told you it is our opinion. What we can show you is the order of the gates, and it sits where it sat last week. First the state takes the weapons, and this week the loudest holdout asked to talk. A full cabinet follows the ceremonies. Parliament receives the budget on October 15. Last comes the rate, and that one belongs to the bank.

Our watch is the same list with two items paid off: Sovereignty Day came, and the customs rule is live. Still open are the weapons plan the Foreign Minister promised in days, the cabinet names, October 15, and the CBI's wire.

Babylon became the place the region settled its accounts because outsiders trusted its ledger. This week you watched a Gulf exchange agree to settle Iraqi trades in IQD.

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