ERBIL, Kurdistan Region - The Central Bank of Iraq (CBI) on Sunday warned banks across the country against rejecting customers’ request to withdraw their cash in dollars, saying it will consider taking “necessary measures” against banks refusing such demands.
As the Iraqi dinar continues to lose value against the US dollar despite ongoing efforts from the federal government to control the instability, many banks across Iraq have started preventing customers from withdrawing their money in dollars and only allowing them to withdraw in Iraqi dinars at the value set in the budget.
The move has drawn a lot of controversy and public outcry, as the value of the Iraqi dinar against the US dollar in the country’s currency markets continues to be much lower than the one set out in the budget.
The CBI said in a statement on Sunday that all licensed banks are required to comply with previously issued circulars which defines the limit on how much foreign currency can be withdrawn in cash from an Iraqi bank account during a specified amount of time “to avoid the inability of meeting your customers’ requests to withdraw their deposited dollars in cash.”
The central bank said that many customers of such banks have filed complaints in this regard, noting that it will take the complaints into consideration and “take the necessary measures against the banks that are refusing [dollar withdrawals].”
Last month, the CBI announced that all the transactions inside Iraq would be made using Iraqi dinars starting in 2024.
The 2023, 2024, and 2025 Iraqi federal budget, passed in June, set the exchange rate of $1 to 1,300 Iraqi dinars. The ongoing smuggling has prevented the suggested value from being reached, with the value of the dollar currently sitting at around 1,570 IQD in the currency markets of Iraq and the Kurdistan Region.
The depreciation of the Iraqi dinar has been attributed to the smuggling of dollars out of the country, mainly to neighboring Iran.
The US in July banned transactions with 14 Iraqi banks for allegedly violating its rules. The move further dropped the value of the Iraqi currency.