Iraqis are prohibited from trading with US dollar

 

The Iraqi Interior Ministry has outlawed dealing in US dollars, the latest step taken by the government to stabilize the volatile black market currency rate.

The unexpected decision on Sunday represents an effort to reduce the exchange rate disparity between the official rate and the black market rate, which has fueled high costs and sparked resentment.

According to the government, "the dinar is the national currency in Iraq." "Your decision to use it as a medium of exchange rather than other currencies strengthens the nation's economy and sovereignty."

It warned to "hold accountable anyone who attempts to undermine the Iraqi dinar and the economy," claiming that dealing in other currencies "is a violation that is punishable by law."

The statement omitted information about potential consequences. Officials from the interior ministry declined to comment.

The harsh UN-imposed economic sanctions, the Gulf War in 1991, the US-led invasion in 2003, and other events led to a significant depreciation of the Iraqi dinar. Iraqis now use the US currency as a result. It is used to settle a broad variety of transactions, including wholesale trade and retail purchasing.

The Iraqi government has spent the last six months trying to halt a currency crisis that has increased the cost of products and prompted demonstrators to go to the streets.

The US tightened its regulations for foreign transactions later in November, which caused the Iraqi dinar to become more volatile. Some have blamed Washington for the dinar's issues.

The US has expressed dissatisfaction with the flow of dollars to Iran, Syria, and Lebanon via the Central Bank of Iraq's foreign currency auction. US sanctions cover Syria and Iran.

Since that time, the Federal Reserve Bank of New York has taken strong action against requests from Iraq for foreign transactions, denying many of them and delaying others, which has raised Iraq's need for US dollars.

Additionally, it has blacklisted many institutions in Iraq that are thought to have engaged in money laundering and dubious activities.

The US is allegedly to blame for the instability around the dollar in Iraq. To keep the public's ire under control, several ineffective approaches have been tried.

The largest US dollar markets in Baghdad were raided by security agents, who also detained numerous dealers and accused them of fixing the exchange rates.