The Iraqi dinar continued to fall against the US dollar, despite the government’s vigorous measures. This decline negatively affected commercial transactions in most of the wholesale markets in Baghdad and the provinces.
On Monday, the exchange rate reached IQD 1,540 to the dollar in the parallel market, compared to IQD 1,320 to the dollar in the official currency auction approved by the Central Bank.
A wholesaler in the Shorja commercial souk in Baghdad told Asharq Al-Awsat that the market was witnessing a great stagnation, adding that the movement of buying and selling has declined recently due to the fluctuating exchange rates.
He noted that traders are worried that the Iraqi dinar would continue to fall against the dollar, touching the ceiling of IQD 1,700 for one dollar, as happened at the beginning of 2023, thus contributing to the rise of commodity prices and basic materials.
The trader did not rule out that the recent US sanctions on 14 Iraqi banks and the central bank’s ban on dealing with them in dollars was behind the new exchange crisis, although the central bank is pumping more money into the currency auction.
Last week, the US Treasury imposed sanctions on 14 Iraqi banks in a crackdown on Iran’s dealings in dollars.
The Wall Street Journal quoted US officials as saying they were taking action against the banks after uncovering information that they engaged in money laundering and fraudulent transactions, some of which may have involved sanctioned individuals and raised concerns that Iran could be benefitting from the dealings.
The continuous decline in the exchange rates of the dinar against the dollar prompted Prime Minister Mohammad al-Sudani to meet with the Governor of the Central Bank, Ali al-Alaq, on Sunday, in the presence of financial advisors and the director general of investment in the bank.
According to a statement, al-Sudani was briefed on “clarifications about the most important facilitations provided by the Central Bank, which include allowing small merchants and individuals to finance their imports without the need to establish a company, through government and private banks that have direct relations with correspondent banks.”
Participants in the meeting also emphasized the need to maintain the compensation for citizens and companies who buy dollars at the unofficial rate.
During the meeting, al-Alaq revealed “the bank’s intention to resume selling cash dollars through licensed banks in Nineveh governorate.”
