This move comes in response to the Dinar’s weakening value in currency markets against the US Dollar.
The depreciating Dinar has triggered a rise in the prices of essential commodities, including food and energy, aggravating the living conditions of many Iraqis. The switch to Dinar only domestic transactions aims at strengthening the national currency, which has been negatively affected by the smuggling of Dollars out of Iraq, predominantly to Iran.
The Central Bank has also tightened regulations to ensure Dollars do not reach Iran, a measure enforced under us pressure. The US has wielded considerable influence over Iraqi economy and banking systems due to a massive reserve of more than 100 billion Dollars held in the US. This has led critics to accuse the US of holding Iraq economically hostage.
