Despite claiming just a week ago that ISIS is operating its entire economy on US dollars, the latest reports about ISIS are reporting they are making a significant profit in controlling the exchange between dollars and the Iraqi dinar, which by and large are what they are paying people in.
While the formal exchange rate established by the Iraqi government is 1,180 dinars per dollar, the reports out of Mosul suggest the trade goes from 1,270 dinars in large note exchange all the way to 1,550 dinars for smaller notes.
Though traders are complaining this amounts to ISIS “rigging” the Mosul market, they can and almost certainly are justifying this as simple supply and demand, as recent US airstrikes in Mosul have destroyed large amounts of US currency, making it scarcer in the ISIS caliphate than it is in Baghdad.
Instead of hamstringing ISIS operations, as the US claimed it was doing at the time, they’ve simply shifted the exchange rate in ISIS territory by creating a new scarcity, and positioning ISIS to profit on the fact that they’re the only ones with serious currency reserves left. The losers, in the end, are the average people in ISIS territory, and any losses the airstrikes inflicted on ISIS will be made back on exchange.