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Why Iraq's dinar is trading below official dollar rate amid new restrictions

A top US official visited Iraqi officials last week to discuss countering illicit finance and strengthening Iraq’s financial system.
Two bank employees count dollars and Iraqi dinars in Baghdad on Sept. 28, 2000.

The Iraqi dinar continued trading below the official US dollar rate on Monday after Iraq banned several banks from US dollar transactions, further complicating Iraq’s efforts to stabilize its monetary situation and maintain good relations with the United States.

Eight local banks were banned from using the central bank’s daily dollar auction. The monetary institution made the decision in an effort to reduce money laundering, fraud and other illegal actions amid US concerns about dollar smuggling to Iran, Reuters reported.

The following banks were banned: Ahsur International Bank for Investment, Investment Bank of Iraq, Union Bank of Iraq, Kurdistan International Islamic Bank for Investment and Development, Al Huda Bank, Al Janoob Islamic Bank for Investment and Finance, Arabia Islamic Bank and Hammurabi Commercial Bank, according to the outlet.

The action follows the visit of the US Department of the Treasury’s top sanctions official, Under Secretary for Terrorism and Financial Intelligence Brian Nelson, to Iraq last week to discuss countering illicit finance and strengthening Iraq’s financial system with Iraqi officials, the department said in a statement.

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