Iraq faces fierce battle against currency smugglers
The Central Bank of Iraq. Photo: INA
Baghdad (IraqiNews.com) – The governor of the Central Bank of Iraq (CBI), Ali Mohsen Al-Alaq, said that Iraq has taken steps to implement US dollar supply restrictions targeting Iran but faces a fierce battle with a banking system unaccustomed to strict oversight and persistent currency smugglers, according to a report issued by Reuters.
During an interview with Reuters, Al-Alaq explained that the people benefiting from this situation and those harmed by the new measures will try in various ways to continue their illegal activities.
The CBI governor told Reuters that he did not have data on how much of Iraq’s dollars had been smuggled to Iran or other neighboring countries, including Turkey and Syria, before the United States tightened regulations in November.
According to Reuters, the US measures that aim to enforce sanctions on Iran are a sensitive matter in Iraq, which has often been a frontline in the rivalry between Washington and Tehran.
Al-Alaq also clarified that Iraq has more than $100 billion in reserves but could not freely intervene in the market to bring the rate down due to the restrictions, Reuters added.
The rise took place after the United States barred 14 Iraqi banks last month from conducting US dollar transactions as part of a crackdown on transferring US currency to Iran and other sanctioned countries, The Wall Street Journal (WSJ) reported.
The ban was imposed by the Treasury Department and the Federal Reserve Bank of New York, according to The Wall Street Journal (WSJ).
The 14 banks facing the ban issued a joint statement urging the Iraqi government to address the problem and warning that banning one third of Iraq’s private banks from conducting US dollar transactions would not only affect the exchange rate but also impede foreign investment.
Al-Alaq stated earlier that the CBI will continue to provide US dollars at the official rate of 1320 dinars to one dollar for all legitimate transactions, including transfers and credits for various imports.
Al-The CBI governor explained that the rise in the exchange rate is due to the reluctance of some merchants to use the official electronic platform used for currency requests.