Sanctioned Iraqi Banks Warn of Dinar Devaluation

Fourteen private Iraqi banks, sanctioned by the United States for allegedly facilitating the transfer of US dollars to Iran, announced on Wednesday, July 25, that they are prepared to challenge these actions and confront the auditing process, asking Iraqi officials for assistance. According to Reuters, officials from the Central Bank of Iraq stated that US financial authorities last week prohibited 14 Iraqi banks from conducting any transactions with Iran in dollars, which is part of the US effort to curb the broader smuggling of dollars to Iran through the Iraqi banking system. The US Treasury Department and the Federal Reserve (the US central bank) in New York did not respond to Reuters' requests for comment. Ali Alalak, the head of the Central Bank of Iraq, said on Wednesday that the organization is pursuing the matter and did not indicate whether more Iraqi banks would be sanctioned by the US. He noted that banks from other countries have so far been able to meet market demand for dollar transactions, and the 14 sanctioned banks account for only 8% of foreign financial transfers. The fourteen Iraqi banks are prohibited from conducting transactions in dollars but can continue to use the Iraqi dinar and other foreign currencies. These measures are in accordance with US regulations aimed at deterring the illegal transfer of dollars to Iran and exerting further pressure on Tehran, in addition to other US sanctions regarding the country's nuclear program and other issues. Additionally, an Iraqi spokesperson representing the 14 sanctioned banks stated on Wednesday that the sanctions could further weaken the Iraqi currency, which has decreased in value from approximately 1500 dinars to 1580 dinars per dollar over the past week. Two officials from the Central Bank of Iraq also mentioned that the latest US sanctions, along with previous sanctions on eight banks, have blacklisted nearly one-third of Iraq's 72 banks.