Starting from Sunday, CBI to adopt measures that will send the US dollar exchange rate soaring
Shafaq News/ Iraq's Central Bank (CBI) will halt cash sales in its daily forex auctions starting from tomorrow, Sunday; a move that is expected to send the US dollar exchange rate against the Iraqi dinar to record levels.
"Starting from tomorrow, the central bank will halt direct cash sales to commercial banks. Cash transactions will be exclusively mediated via an online platform," a senior CBI source told Shafaq News Agency, "such a move will significantly limit cash sales."
"The demand for the US dollars in the market will rise accordingly, pushing its exchange rate again the local currency to more than 1,750 dinars to 1," the source elaborated.
The dinar went into a tailspin against the dollar after the New York Federal Reserve imposed tighter controls on international dollar transactions by Iraqi commercial banks in November to halt the illegal siphoning of dollars to neighboring Iran and Syria, which are under tough U.S. sanctions.
Under the curbs that took effect this month, Iraqi banks must use an online platform to reveal their transaction details. But most private banks have not registered on the platform and resorted to informal black markets in Baghdad to buy dollars.
This has created dollar shortages as demand has outstripped supply and accelerated the dinar's descent against the greenback.
Prime Minister Mohammed al-Sudani replaced the central bank governor last week as he had not taken effective steps to tackle the consequences of the new Fed regulations and their impact on the dinar, government sources told Reuters.