The Central Bank of Iraq provides insight into its support of the Iraqi Dinar under new guidelines.

This news article is translated from a reliable news source in Baghdad, Iraq. 

The Central Bank of Iraq announced, on Friday, January 5, 2024, procedures and decisions to support the dinar and maintain its strength against other currencies, as well as other measures that will positively affect the exchange rate, while noting that measures have been taken to gradually terminate the electronic platform.  (Iraq is doing away with the electronic money transaction requirement.)

A statement by Muhammad Yunus, Assistant Director General of the Central Bank of Iraq's Department of Investments, stated that "in the event that banks are forced to convert customer accounts into US dollars, the Central Bank will monitor and follow up on all banks and customer complaints." It stresses that "this issue is easily followed and monitored, and banks will be held accountable if they do not comply."

Note from Editor:  What all this means is, it may be difficult to show up at an Iraqi Bank and request US dollars in exchange for the Iraqi Dinar. 

In addition, he noted that "this decision and those that will follow in the coming days are all aimed at supporting and enhancing confidence in the Iraqi dinar," adding that "the continued existence of the Central Bank of Iraq confirms the strength of the dinar and the public's confidence in it," because it doesn't lag behind in meeting the needs of various sectors, such as trading, electronic payments, travel, and others."

In the coming days, he noted that more measures will be taken to meet the needs of the market, support the Iraqi dinar, and maintain its strength against other currencies, noting that "through its new procedures, the Central Bank prevented banks from automatically transferring customer accounts in dollar currency to Iraqi dinar currency without customer consent, and allowed customers to open different currencies."

He noted that "what is new in the modernization of procedures is that companies that have contracts with the state were permitted to receive their incoming transfers, including the salaries of workers, as well as ongoing contracts on grants and loans in accordance with the Council of Ministers," he added. In addition, this new decision allows banks to agree with their clients that they will bring in cash incoming remittances to Iraq.

"These measures will positively affect the exchange rate in the market, increase the supply of dollars, and contribute to serving and supporting important sectors in the economy, including exporters and companies operating in the government sector, infrastructure development and strategic projects, as well as supporting civil society organizations that serve the humanitarian and charitable sectors in Iraq," he said.

The purpose of this update/instructions is to increase access to cash dollars for various needs. The beneficiaries now include civil society organizations and exporters, who can receive 40% of incoming remittances in cash. This will have a positive impact on the economy as a whole.

He noted that the decision established clear guidelines for banks to follow in implementing it, specifically highlighting its impact on incoming remittances. This allows certain groups to receive their remittances in cash. He clarified that the decision solely pertains to incoming remittances and not the sale of dollars to travelers, which will continue as usual. Furthermore, this decision will meet the demands of both customers and companies, leading to a positive effect on the exchange rate in the upcoming days.

"Banks do not face any restrictions in the area of money transfers, as procedures exist for gradually terminating the platform of the Central Bank of Iraq by supporting interests to open foreign bank accounts abroad, and the Central Bank's role is limited to strengthening these balances and following up on transfer operations."

The Assistant Director General of the Department of Investments in the Central Bank of Iraq, Muhammad Yunus, said "There are no restrictions on the transfer of funds in different currencies within the banking system in foreign currencies, but this decision is related to the cash dollar (cash withdrawal),"