Dollar soars against Iraqi dinar: three main reasons explained

Shafaq News/ On Thursday, the former director of the Central Bank (CBI) and economic expert Mahmoud Dagher, revealed three reasons for the recent dollar's rise against the Iraqi dinar.

Dagher said in an interview with Shafaq News Agency, "There are several reasons behind the dollar's rise against the dinar, but the most important one is the decision of the CBI to sell cash dollars to travelers inside the airport."

“The second reason is the suspension of external currency transfers via the dollar, which are planned to be resumed, especially to China, with strict monitoring by an international auditing company, senders, and banks that carry out transfers differently,” he added.

He further stated that the third reason is "the insistence on trade with Iran and Syria - two countries that do not have a banking system in the world - which makes it more difficult for them to obtain the dollar."

This week, the dollar rose against the Iraqi dinar )$100 equivalent to approximately

150,000 dinars). Last Monday, the CBI issued new instructions regarding granting US dollars to travelers, indicating that they will enter into force starting from July 14.

According to the Bank’s statement directed to the Rafidain and Rasheed banks, the Trade Bank of Iraq, the exchange companies currently operating at airports, and the A- and B-class exchange companies, “It was decided to set 7/14/2024 as the final date to start granting dollars to travelers at airports exclusively, to ensure that they receive the cash dollar and spare the exchange companies from passing improper transactions.”

The CBI stated that the aforementioned banks and exchange companies operating at the airport are entitled to a lump sum commission of (15,000) dinars from the customer for each transaction. Exchange companies outside the airport collect it for the benefit of companies and banks operating at the airport, based on a mechanism determined between the two parties: banks and companies operating at the airport and exchange companies outside the airport.

In 2023, the exchange rate of the dollar soared to an unprecedented 1,700 dinars per dollar, maintaining this level for several weeks before gradually declining in the latter part of the year. In the past two months, the rate stabilized between 1,470 to 1,450 dinars per dollar.

The Iraqi currency crisis began after the US Treasury Department barred 14 Iraqi banks from the global banking transfer system known as SWIFT in an effort to prevent dollar smuggling to Iran.

The CBI platform manages foreign currency requests specifically for financing foreign trade in the private sector.