ERBIL, Kurdistan Region - The head of the Iraqi central bank on Sunday announced that all transactions inside the country will only be made using the Iraqi dinar in 2024, as the value of the currency against the US dollars continues to be much lower than the one set in the federal budget. The Iraqi dinar has been losing value against the US dollar for several months, leading to a surge in prices of basic goods and consequent outcry from the Iraqi public. The depreciation has been attributed to the smuggling of dollars out of Iraq, mainly to neighboring Iran. “Next year, all internal commercial and other transactions will be restricted to the Iraqi dinar instead of the dollar, except for those given to travelers,” Ali Mohsen al-Alaq, Governor of the Central Bank of Iraq (CBI), said on Sunday. Alaq noted that most businesspeople have entered the official conversion channels which provides one dollar at the price of 1,320 Iraqi dinars, which he said has played a major role in “decreasing the rate of inflation.” 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, and the value of the dollar currently sits at around 1,530 IQD in the currency markets of Iraq and the Kurdistan Region. 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. The CBI in late 2020 devalued the dinar against the US dollar by 22 percent, dropping it from 1,182 IQD to 1,450 IQD and sparking public outrage. The devaluation came in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.
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