Iraqi Currency Crash Halts After Meeting With U.S. Treasury Official

BAGHDAD—Iraq’s currency ended its nosedive after a meeting between the Iraqi Central Bank head and a top U.S. Treasury official.

Brian E. Nelson, Under Secretary of Treasury for Terrorism and Financial Intelligence, stated in a statement Saturday that Ali al-Allaq, Governor of Central Bank of Iraq, had met him in Istanbul the previous day “to discuss banking sector reforms and a mutual commitment to anti-money laundering and countering the financing of terrorism.”

He praised Iraq’s “steadfast dedication” to improve compliance with international standards “and offered continued cooperation in modernizing the banking sector,” According to the statement.

Measures taken by the United States in recent months to stamp out money laundering and the channeling of dollars to Iran and Syria from Iraq have severely restricted Iraq’s access to hard currency.

Since the U.S. invasion of Iraq in 2003, Iraq’s foreign currency reserves have been housed at the United States’ Federal Reserve, giving the Americans significant control over Iraq’s supply of dollars.

At street exchanges across Iraq, the Iraqi dinar dropped to about 1,750 dollars per dollar on Thursday. This is compared to its official rate of 1,460 dinars to $1. Protests have been held and there are fears about inflation due to the currency’s devaluation.

The currency began to halt its slide after Iraq’s Central Bank said in a statement Friday evening that the Treasury had “expressed its readiness for the necessary flexibility to achieve common goals.” On Saturday, the dinar traded at approximately 1,600 dinars per dollar.

Next Friday, a delegation of Iraqi officials will travel to Washington.