Iran Cut Off from Iraqi Dollars; Currency Exchange with Iran Banned

Media in Iran reported on a new decision in Iraq that will create an obstacle for Iran's access to dollars. According to these reports, the Central Bank of Iraq has enacted a new law in the currency sector, prohibiting official exchange offices and banks in the country from conducting any currency exchange with five countries, including Iran, making it impossible for the Islamic Republic to obtain dollars through legal channels. The newspaper 'Donya-e-Eqtesad' addressed this issue, stating that under this law, any currency supply from the Iraqi market must occur through the country's free market, where 'the rate difference is 20 percent.' Although the report mentions supply from the free market, an economic journalist told Voice of America: 'The Iraqi government's measures, under U.S. pressure to combat dollar smuggling to Iran and create restrictions in the free market, will make currency supply for Iran very, very difficult and costly.' Reza Ghaibi emphasized that even if an Iraqi importer or Iranian exporter does not face issues obtaining currency from the free market, the price difference will reduce the value of Iranian exports and increase the costs for the Iraqi side. According to Ghaibi, this law will also jeopardize trade between the two countries. The 'Donya-e-Eqtesad' newspaper also highlighted that 'the new Iraqi government law could impact the domestic currency market.' According to this newspaper, Iraq is one of the entry points for currency into the country, and this law will complicate the entry of currency, resulting in an increase in the domestic currency cost. It remains to be seen whether the Central Bank of Iran will take action to counter this Iraqi law. Yesterday, the overall trend in the Tehran currency market was relatively stable, with the dollar trading at around 50,300 tomans, a decrease of about 50 tomans. In recent months, the dollar price has fluctuated around 50,000 tomans. Experts say this price stabilization is due to the Central Bank's pressure on both supply and demand sides and cannot be sustained. Therefore, the new Iraqi government law could subject the Iranian currency market to severe fluctuations. These developments occur while the Islamic Consultative Assembly, this morning, held a closed-door meeting with the presence of the Central Bank Governor and the Minister of Economy of Ebrahim Raisi's government to review the currency policies implemented by the government in recent months. As of the time of this report, no details about this closed session have been published.