Iraq’s CBI Warns Banks Over Restricting USD Withdrawals
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Iraq’s CBI Warns Banks Over Restricting USD Withdrawals

ERBIL — The Central Bank of Iraq (CBI) has taken measures to address a currency crisis in the country, directing all Iraqi banks to collaborate with authorized foreign exchange centers to mitigate financial deficits.

In a statement released on Sunday, the CBI also issued a stern warning to Iraqi banks, emphasizing that it would pursue legal actions against any bank found obstructing Iraqi citizens from withdrawing US dollars.

Recent developments in the Kurdistan Region and Iraqi markets have seen the value of 100 USD surpass 160,000 Iraqi dinars. Speculation had been rife that the value would further climb to 170,000 dinars, attributing this trend to the alleged failure of the US Federal Reserve System to provide adequate cash to Iraq.

However, a statement from the CBI countered these claims, denying any cessation of cash supply from the US Federal Reserve System. It clarified that cash would be furnished in annual installments.

Nevertheless, concerns persist among economists regarding the central bank's decisions and their impact on the dinar's depreciation against the dollar.

Economist Nasser Kinani expressed apprehension, saying, "The central bank's decisions to address the dollar crisis are contributing to the crisis rather than offering a real solution. The situation is deteriorating day by day."

Despite the central bank's official exchange rate of 132,000 dinars per 100 dollars, the market rate stands at approximately 159,000 dinars, reaching 161,000 dinars by the end of the previous week.

Presently, the central bank has implemented restrictions on dollar withdrawals for citizens and business entities, adhering to the official rate.

“Certain measures taken by the central bank, such as allowing some banks to withhold dollar transfers to citizens, are exacerbating the dollar crisis. Citizens are compelled to turn to the local markets to acquire dollars, further driving up demand.”

“If the dollar's appreciation continues, it could exceed 200,000 dinars for every 100 dollars,” Kinani added.

Mazen Ahmad, the Director General of Investment at the central bank, provided insights into future measures, stating, "Starting from the beginning of next year, the central bank will cease dollar withdrawals, and citizens will only be able to withdraw local currency from ATMs. Each 100 dollars will be equivalent to 132,000 dinars."

"The primary aim is to curb the illicit use of dollars, as Iraq withdraws $10 billion annually from the US Federal Reserve," Ahmad explained.

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