BAGHDAD, July 26 (Reuters) – Iraq’s currency has fallen against the U.S. dollar because some traders are sourcing hard currency in the black market instead of using the central bank’s official exchange platform, central bank governor Ali al-Allaq told Iraqi state media on Wednesday.
Allaq said that some merchants were not using the platform because they were engaged in illegitimate financial activities but said the recent increase in the dollar-dinar exchange rate would be temporary as more individuals and businesses got on board.
He also said some sides were spreading rumors over the currency’s decline in order to engage in currency speculation.
The Iraqi dinar was changing hands at around 1,580 per dollar on Wednesday compared to around 1,470 about a week ago.
The official exchange rate is set at 1,300 dinars per U.S. dollar.
In line with tougher U.S. regulations governing Iraq’s access to dollars that went into effect last year, all requests for transfers must now go through an electronic system that contains detailed information on the end-recipient of dollars.
The U.S. measures aim to curb the illegal siphoning of dollars to Iran and apply pressure on Tehran along with U.S sanctions imposed over its nuclear programme and other disputes.
But the system has slowed access to dollars, central bank officials say, with wait times sometimes exceeding a month, leading many traders to go to the black market to source their dollars, which in turn drives up the exchange rate.
Allaq said that the central bank received transfer requests averaging $155 million per day and could cover the demand, with FX reserves standing at more than $113 billion.
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Reporting by Timour Azhari in Baghdad; Writing by Jana Choukeir and Timour Azhari ; Editing by Toby Chopra
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