Iraq News: Citizens and Banks Protest Over the Deterioration of the Iraqi Dinar Back in July of 2023

The United States blacklisted 14 Iraqi banks leading to a sharp increase in the dollar exchange rate in Baghdad and protests in front of the Central Bank of Iraq.

It has been two days since the market rate of the dollar jumped from 1,470 dinar to 1,570 dinar. As a result of suspicions of money laundering and funneling funds to Iran, 14 Iraqi banks were listed among banks that were prohibited from handling U.S. dollars.

First reported by the Wall Street Journal on July 19, the U.S. Treasury Department and the Federal Reserve Bank of New York imposed the ban.

Haidar al Shamaa, owner of a private bank in Baghdad, said Wednesday that listing almost a third of private banks as banned from dealing with the U.S. dollar has negative consequences from many perspectives.

According to him, "the brothers at the Iraqi government must work ... to undo the damage caused to us and to the Iraqi banking sector in general."

A joint statement issued by 14 banks facing the ban called on the Iraqi government to address the problem and warned that banning a third of Iraq's private banks from dollar trading would also harm foreign investment.

Organizers of Thuwar Tishreen (October Revolutionaries), which is related to a movement that started mass protests in Iraq in 2021, demanded the government stop inflation.

According to the state-run Iraqi News Agency, Ali al-Allaq, the head of the central bank, continued to provide dollars at the official rate of 1,320 dinars to the dollar for "all legitimate transactions," including "remittances and credits for various imports."

As a result, he blamed the current rise in the street price of the dollar on the "reluctance" of certain merchants to use the official electronic platform for currency requests.

Al-Allaq met with the Iraqi Prime Minister Mohammed Shia al Sudani on Sunday to discuss measures to stabilize the dinar price.

Following measures taken by the United States late last year to stamp out money laundering and the channeling of dollars from Iraq to Iran and Syria, Iraq's access to hard currency took a similar dive earlier this year.