A wave of protests has erupted in Baghdad as citizens and bank owners express their concerns over a sharp increase in the exchange rate of the Iraqi dinar against the US dollar. The protests were triggered by the recent decision of the United States to blacklist 14 private Iraqi banks, accusing them of involvement in money laundering and funding Iran.
In just two days, the market rate of the dollar surged from 1,470 dinar per dollar to 1,570 dinar per dollar, causing widespread alarm among the Iraqi population. The ban imposed by the US Treasury Department and the Federal Reserve Bank of New York has led to a sense of urgency as people worry about the impact on the economy and their daily lives.
During a news conference, Haidar al Shamaa, the owner of a private bank in Baghdad, demanded immediate action from the Iraqi government to address the situation. Al Shamaa highlighted the negative consequences of having almost one-third of the private banks banned from dealing with the US dollar, emphasizing the potential damage to the Iraqi banking sector and urging officials to take steps to reverse the situation.
The 14 banks affected by the ban have issued a joint statement, urging the Iraqi government to intervene and warning of the adverse effects on the economy and foreign investment. They emphasized that the restriction on dollar trading would not only impact the exchange rate but also hinder economic growth and development.
Protests were organized by a group known as Thuwar Tishreen, connected to a larger movement that initiated mass protests in Iraq in 2021. The demonstrators called on the government to take immediate action to address inflation and stabilize the economy, reflecting the growing frustration and anger among the Iraqi population.
In response to the situation, Ali al-Allaq, the central bank chief, assured the public that the central bank continues to provide dollars at the official rate for legitimate transactions. He blamed the increase in the street price of the dollar on certain merchants who do not engage in legitimate activities and refuse to use the official electronic platform for currency requests.
The Iraqi Prime Minister, Mohammed Shia al Sudani, met with al-Allaq to discuss measures to stabilize the dinar against the dollar. This meeting reflects the government's recognition of the urgency of the situation and its commitment to finding solutions to protect the economy and alleviate the concerns of citizens.
This recent jump in the value of the dollar against the dinar is reminiscent of a similar episode earlier this year when US measures aimed at curbing money laundering and restricting dollar flows to Iran and Syria severely limited Iraq's access to hard currency. These repeated incidents highlight the vulnerability of the Iraqi economy to external factors and underscore the need for long-term stability and robust financial regulations.