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Iraq is set to ban cash withdrawals and transactions in U.S dollars as of Jan. 1, 2024, as part of a broader push to de-dollarize the country’s economy. The move aims to stamp out the illicit use of around 50% of the $10 billion Iraq imports in cash from the New York Federal Reserve each year. Mazen Ahmed, director-general of investment and remittances at the Iraqi central bank (CBI), said that the move is part of a broader push to de-dollarize an economy that has seen the greenback preferred over local notes by a population weary of recurring wars and crises following the 2003 U.S. invasion.
People who deposit dollars into banks before the end of 2023 will continue to be able to withdraw funds in dollars in 2024, but dollars deposited in 2024 could only be withdrawn in local currency at the official rate of 1,320. The parallel market rate of the Iraqi dinar sat at 1,560 on Thursday, roughly 15% percent below the official rate.
Iraq has already set up a platform to regulate wire transfers that make up the bulk of its dollar demand and used to be a hotbed of fake receipts and fraudulent transactions that siphoned dollars to Iran and Syria, both countries under U.S. sanctions. However, cash withdrawals have continued to be misused, including by would-be travelers provided with a state quota of $3000 who have found ways to game the system.
SOURCE: REUTERS (By Timour Azhari)