Iraqi Central Bank Chief: We Will Implement US Restrictions on Dollar Supply

Ali Mohsen Al-Alaq, the head of the Central Bank of Iraq, stated on Wednesday, August 16, that the country has taken steps to implement US restrictions on the supply of dollars, which target Iran. He likened the implementation of these measures to a tough battle, as 'the Iraqi banking system is not accustomed to strict oversight, and currency traffickers have been very active in such a system.' Al-Alaq told Reuters, 'This is really a battle, as those who benefit from this situation and those who are harmed by the new measures are trying in various ways to continue their illegal activities.' According to Reuters, the head of the Central Bank of Iraq did not mention Iran by name and stated that he has no information on how much of Iraq's dollars were smuggled to Iran or other neighboring countries, including Turkey and Syria, before the tightening of US regulations in November. US actions aimed at enforcing sanctions against Iran are a sensitive issue in Iraq. The Iraqi government relies on the continued goodwill of Washington to ensure that its oil revenues and financial resources do not face US penalties, but according to Reuters, the Iraqi government came to power with the support of powerful groups backed by Tehran and therefore cannot make them its enemies. Ali Mohsen Al-Alaq stated that Iraq has more than $100 billion in foreign reserves, but due to the imposed restrictions, it cannot freely use these resources to intervene in the market to reduce the exchange rate. US officials stated that last month, the US Treasury and the Federal Reserve prohibited 14 Iraqi banks from conducting dollar transactions. These measures are part of the US efforts to crack down on the broader smuggling of dollars to Iran through the Iraqi banking system. Efforts to combat dollar smuggling to Iran come at a time when, according to the website Ben-Bast, each US dollar was traded for 49,200 tomans in the Iranian free market during hours on Wednesday. The head of the Central Bank of Iraq also mentioned that a new platform aimed at improving the transparency of financial transactions has been activated, and the Central Bank of Iraq is reviewing the banking sector and imposing new regulations that, according to him, will lead to the closure of some banks. US actions have targeted what is referred to as the Iraqi dollar auction. In the Iraqi dollar auction, the Central Bank of the country requests dollars from the US Federal Reserve before selling dollars to its commercial banks, which in turn sell dollars to companies. The Iraqi economy is heavily reliant on imports. US and Iraqi officials say that such dollar auctions have resulted in large amounts of dollars being given to groups that present fake invoices, and then those amounts are transferred to neighboring countries, especially Iran, or physically smuggled. Iraqi anti-terrorism forces have taken action to combat dollar smuggling to Iran. Sanctioned Iraqi banks warn of the devaluation of the dinar. The exchange without dollars between Iran and Russia; a mirage or reality? Farzin reported on the direct and exclusive buying and selling of dollars by the Central Bank. The challenge of currency transfer continues; the Central Bank of Iraq does not allow the transfer of dollars to Iran. The return of the dollar to 54,000 tomans; The Economist: the value of the Iranian currency has decreased by 55% in a year. Increase in fuel smuggling from Iran; 'Uncertain fate' of 10 million liters of diesel daily. The Wall Street Journal report: the US prevents the transfer of dollars to Iran by pressuring Iraq.