Following demonstrations in Iraq over the recent slide of the Iraqi dinar against the dollar, a delegation of Iraqi officials will travel to Washington to resolve issues related to US banking restrictions.
As hundreds of people demonstrated near the central bank headquarters in Baghdad on Wednesday to protest the devaluation of the Iraqi dinar against the dollar, which has triggered a rise in prices of imported consumer goods, an informed source told Iran International that representatives from the Iraqi government are scheduled to go to US next month to investigate the smuggling of dollars from Iraq to Iran.
People from different Iraqi regions waved Iraqi flags or carried banners demanding government intervention to stop the dinar's decline to around 1,620 to the greenback from 1,470 in November. “Stop the neighbors stealing our dollars,” one banner read, alluding to Iran. The protesters demand that the government must intervene to stop the decline of dinar value because people are suffering from high prices in local markets.
According to Iran International’s source, who asked not to be named, it is not clear whether Iraqi Prime Minister Mohammed Shia' Al Sudani will head the delegation or not. The visit could take place in early February.
The dinar went into a tailspin against the dollar after the New York Federal Reserve imposed tighter controls on international dollar transactions by commercial Iraqi banks in November to halt the illegal siphoning of dollars to neighboring Iran, which is under tough US sanctions.
The move blocked more than 80 percent of Iraqi bank transfers. Under the curbs that took effect this month, Iraqi banks must use an online platform to reveal their transaction details. But most private banks have not registered on the platform and resorted to informal black markets in Baghdad to buy dollars.
This has created dollar shortages as demand has outstripped supply and accelerated the dinar's descent against the greenback. The Wall Street Journal recently reported that the intensification of pressure on the Islamic Republic has caused the value of Iraq's currency to drop.
Sudani replaced the central bank governor on Monday as he had not taken effective steps to tackle the consequences of the new Fed regulations and their impact on the dinar.
Late in December, an informed source in Baghdad told Iran International that Washington has received reports on Iraq conducting trade with Iran using US dollars despite US sanctions. This source added that the names and bank account numbers that have secretly interacted with Iran have not yet been revealed, but the Biden administration has found out that a large amount of US dollars has been transferred from Iraq to some countries, including Iran.
The Islamic Republic needs Dollars to stabilize its deteriorating economy hit hard by US sanctions imposed since 2018 after then-US President Donald Trump ditched Tehran's nuclear deal with six world powers. Iran's troubled currency has lost more than 30% of its value since nationwide protests following the death in police custody of a young 22-year-old Iranian woman, Mahsa Amini, on September 16, 2022 that have further isolated the country.
For years, the clerical establishment has used front companies from Iraq to Turkey to obtain the dollars it needs for international transactions and funding its proxy militia forces across the Middle East.