Steps Iraq Must Take Before the Dinar Can Trade on Forex

Joining the forex market for regular trading is one of the best solutions for Iraqi Dinar investors, enabling them to cash in their Iraqi Dinar Banknotes and trade.

Here’s the short, plain-English version first: the Iraqi dinar (IQD) will only show up broadly on major retail forex platforms when Iraq’s banking system looks “normal” to the rest of the world—meaning one transparent exchange rate, clean anti-money-laundering controls, banks that can move money easily with foreign partners, and enough buyers and sellers so trades can happen smoothly. The IMF doesn’t “flip a switch” to list a currency; it watches, advises, and grades the policies. Iraq has been fixing pieces of this puzzle, but there are still boxes to tick.

Iraq needs one reliable exchange rate and a liquid market. In the past, Iraq had a big gap between the official rate and the street (“parallel”) rate because dollars leaked into the black market. Over 2024–2025, the Central Bank of Iraq (CBI) shifted trade payments off its old “dollar auction” and over to normal bank-to-bank channels (“correspondent banking”). Since January 2025, legitimate international payments are handled by commercial banks through their foreign correspondents, with the CBI supplying them weekly and auditing for compliance. The IMF says this move helped narrow the gap with the parallel market—exactly what you need before most brokers will touch a currency. (IMF)

Iraq must demonstrate robust anti-money-laundering controls to encourage global banks to do business with Iraqi banks. In 2023–2024, the authorities and the U.S. tightened oversight of dollar flows, even banning cash-dollar withdrawals from 1 January 2024 and blocking some banks from dollar transactions to curb smuggling and fraud. That’s painful in the short run but essential to gain trust abroad. In 2025, the IMF noted Iraq had adopted a five-year AML/CFT action plan following a MENAFATF evaluation, and it kept pushing the CBI to strengthen risk-based supervision. These steps are the kind of “plumbing” that makes foreign brokers and banks comfortable listing and trading IQD. (Reuters, IMF)

Iraqi banks need wide correspondent-banking links. For a currency to trade widely, local banks must be able to settle payments through big international banks (not just in U.S. dollars but in other currencies too). The IMF praised Iraq’s transition to trade finance handled by commercial banks through those correspondent links and urged Iraq to keep expanding them—another prerequisite for easy forex trading. (IMF)

The private banking system has to be modern and trustworthy. The IMF continues to press Iraq to restructure its large state-owned banks, strengthen private banks, establish a more robust deposit-insurance scheme and a credit bureau, and enhance bank governance and digital infrastructure. This is less “headline-grabbing,” but it’s what convinces the outside world that transactions in IQD are safe, quick, and predictable. (IMF)

Digital payments and fewer cash dollars help. Iraq rolled out Digital Payment Regulation No. 2 of 2024 to reduce cash usage and raise financial transparency. In May 2025, the CBI issued tighter rules for electronic payment providers focused on AML/CFT. The more Iraq moves onto traceable, electronic rails, the easier it is for global partners to say “yes” to IQD. (UNDP, Iraq Business News)

Policy signals matter (but there’s no IMF “approval stamp” to list IQD). The IMF’s role is surveillance and advice, not flipping currencies on or off the forex market. That said, markets look for signals: stable macro policy, a single exchange rate under a clear regime (Iraq currently operates a conventional peg), and the legal commitment to keep current-account payments free. In 2025, the IMF noted that Iraq continues to utilize the transitional Article XIV status (instead of formally accepting Article VIII obligations), and it also indicated that Iraq does not maintain current-account restrictions or multiple-currency practices. Formal Article VIII acceptance isn’t a hard legal requirement to be traded, but it’s a strong “green flag” to markets and brokers. (IMF)

Here's a List of Tasks Iraq Has Completed.

• Shut down cash-dollar leakage and tightened oversight (ban on cash USD withdrawals from Jan 1, 2024; bans on some banks’ dollar activity). (Reuters)
• Ended the old dollar-auction model and moved trade finance to normal bank channels with audits, helping shrink the official/parallel rate gap. (IMF)
• Launched digital-payments reforms and stricter rules for e-payment firms to meet AML/CFT standards. (UNDP, Iraq Business News)
• Worked with the IMF on banking reforms (state-bank restructuring, private-bank modernization, better liquidity tools, and stronger supervision). (IMF)
• Began tightening money supply in 2025 to support price stability—another sign of policy discipline. (Iraq Business News)

What still needs to happen:

• Keep the official and street rates aligned and liquid so pricing is transparent and spreads are tight. The IMF says progress is real, but more is needed. (IMF)
• Complete the cleaning up of AML/CFT gaps and continue expanding correspondent-banking links to make settlements routine and low risk. (IMF)
• Continue bank reforms so the system is well-capitalized, well-governed, and digitally connected. (IMF)
• (Optional but helpful) Consider formally accepting IMF Article VIII obligations to signal, in legal terms, that current-account payments remain free and non-discriminatory. (IMF)

Bottom line: there isn’t a single button to press to “list the IQD on forex.” It’s about proving—through policies and plumbing—that the system is clean, the rate is stable and unified, banks can settle cross-border payments easily, and there’s enough liquidity. Iraq is moving in that direction (ending dollar auctions, tightening AML, expanding correspondent banking, digitizing payments), and the IMF has publicly recognized these steps. When those improvements “stick,” more global counterparties and, eventually, retail platforms will be comfortable offering IQD. (IMF)