Baghdad, Dec 20 (IANS): The Central Bank of Iraq (CBI) said that it has decided to reduce the value of the Iraqi dinar against the US dollar due to the economic crisis that resulted from the decline in oil prices and the coronavirus pandemic.

A CBI statement said that it decided to reduce the value of the Iraqi dinar to be 1,450 dinars per $1 in the central bank, instead of its previous price of 1,119 dinars per dollar, reports Xinhua news agency.

The exchange rate of the dollar will reach 1,470 dinars in the local market, the statement said.

The CBI attributed the decision to the financial crisis that resulted from the decline in oil prices and the pandemic, which led to a large deficit in the state budget, forcing the government to borrow money from banks to pay salaries and to cover other expenses, according to the statement.

The new devaluation of the Iraqi dinar will be one-time only and will not be repeated, as the CBI will protect the stability of the new price by using its foreign currency reserves, which are still at solid levels, according to the statement.

In a separate statement, Iraqi Minister of Finance Ali Abdul-Amir Allawi said "it has become clear that urgent reforms are needed in various economic fields, including the currency exchange rate".

"Despite the difficulty of this decision, we are forced to take such a step to address a large part of the crisis, and to ensure the protection of the Iraqi economy by achieving a brave reform step," Allawi said.