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Iraqi dinar falls 17% against dollar amid US restrictions over Iran deals

The current depreciation follows 14 Iraqi banks being barred from using the dollar amid a crackdown on smuggling to Iran.
Stacks of Iraqi dinars are seen at a currency exchange shop, Baghdad, Iraq, Feb. 14, 2023.

The Iraqi dinar has fallen below the official exchange rate with the US dollar after new dollar restrictions on a group of Iraqi banks, leading to new protests in the country.

The dinar is currently trading at 1,570 to the dollar on the street. This is around 17% below the official rate of 1,300 dinars to the dollar, Bloomberg reported on Thursday.

The currency fell after new action by the US government to curb the flow of dollars to sanctioned Iran. The Wall Street Journal reported last week that the US Treasury Department and the Federal Reserve Bank of New York barred 14 Iraqi banks from dollar transactions. Restriction on US dollars limit the currency's supply, thus boosting its value against the dinar. 

The Treasury Department and the Federal Reserve Bank of New York did not respond to Al-Monitor’s request for comment.

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