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Iraq’s currency may get uplifted after the meeting between the US top treasury officer and the head of the Iraqi Central Bank.
As Iraqi officials describe, the US has restricted Iraq’s access to its own dollars for stamping out the rampant money laundering operations that benefit Iran and Syria. For months, Iraq has been under a crunch from this currency downgrade and also due to the anger of people, which was growing against the Prime Minister.
Brian E. Nelson, the secretary under the Treasury for terrorism and financial intelligence, said in a statement that he had met Governor Ali al-Allaq, the head of the Central Bank of Iraq in Istanbul, “to discuss banking sector reforms and a mutual commitment to anti-money laundering and countering the financing of terrorism.”
According to the statement, Brian complimented Iraq’s “steadfast dedication” towards international compliance and “offered continued cooperation in modernising the banking sector,”
Iraq has faced significant hits from the US measures to restrict money laundering and dollar transfer to Iran and Syria from Iraqi channels. It severely impacted Iraq’s access to hard currency.
Since the US invasion of Iraq in 2003, the country’s foreign reserves have been housed at the United States Federal Reserve, allowing significant access to the Americans over Iraq’s dollar supplies.
The Iraqi Dinar rose around 1750 to the dollar at the Street exchanges in some parts of the country, compared to the official rate of 1460 dinars for $1. This drastic devaluation prompted fears of inflation and gathered protests in the country.
The currency started to halt after Iraq’s central bank stated that the US Treasury had “expressed its readiness for the necessary flexibility to achieve common goals.”
“Under Secretary Nelson welcomed governor Allaq’s leadership on these issues, noting the longstanding collaboration and partnership between the Treasury Department and the Central Bank of Iraq, particularly on restricting illicit and corrupt actors from exploiting the international financial system,” according to a readout of the meeting with Allaq.
The currency controversy “brought (US) attention to the scale of corruption in Iraq” and towards the impact of corruption on the US from Iran and other hostile parties, said Harith Hasan, head of the Iraq unit at the Emirates Research Center, an Abu Dhabi-based think tank.