Iraq’s currency in flux as foreign transfers come under scrutiny

Iraq's local currency has been on a two-month roller coaster ride following a tightening of procedures for international transfers, with some blaming Washington for the dinar's woes.

While the official exchange rate has been fixed at 1,470 Iraqi dinars against the dollar, the currency was trading at up to 1,600 to the greenback on local markets from mid-November, before settling at about 1,570 dinars, according to state media.

Though the depreciation does not seem particularly dramatic, especially compared to other countries in the region, it has sent panic through the Iraqi population, which fears a price surge on imported goods such as gas and wheat.

"The fundamental reason" for this depreciation is "external constraints", said Muzhar Saleh, a financial adviser to Prime Minister Mohammed Shia al-Sudani.

But other Iraqi officials have placed the blame squarely on the shoulders of one actor -- the United States.

Hadi al-Ameri, a key figure in the pro-Iran former paramilitary Hashed al-Shaabi, has accused the United States of using the dollar "as a weapon to starve nations".

But Iraqi economic expert Ahmed Tabaqchali said that "contrary to current misconceptions, rumours and misinformation, there is no evidence of US pressure on Iraq".

Since mid-November, Iraqi banks have had to comply with certain criteria of the SWIFT international transfer system in order to access their foreign reserves, estimated at $100 billion and held at the US Federal Reserve.

"Taking part in the international cross-border fund transfers requires complying with global anti-money laundering provisions, counter terrorist financing provisions, and sanctions provisions -- such as those that apply to Iran or Russia," Tabaqchali said.

"The new regulations require high levels of disclosure and transparency," he said, adding that this came as a "shock for many... of our banks, who were not used to this".

According to Saleh, Iraqi banks must now register their dollar transfers "on an online platform that reviews transfer requests".