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Iraq’s Prime Minister Dismisses Central Bank Governor Amid Currency Drop

BAGHDAD—Iraqi Prime Minister Mohammed al-Sudani has dismissed the country’s central bank governor amid growing anger over the weakening of the local currency in recent weeks that has caused the price of food and imports to rise.  

Mr. Sudani said Monday he decided to replace the governor, Mustafa Ghaleb Mukheef, who requested to be relieved of the post he has held since 2020. The prime minister named Muhsen al-Allaq as the new central bank governor, according to the state-backed Iraqi News Agency. Mr. Allaq previously served in that role between 2014 and 2020.

Iraq’s dinar has dropped sharply against the U.S. dollar in unofficial currency markets since mid-November, raising the cost of living for ordinary Iraqis in the country’s dollar-dependent economy. The dinar last traded at around 1,600 to the dollar on Monday, compared with the official exchange rate of 1,460. 

A weaker dinar has led to higher prices for imported goods, including staples such as eggs, flour and cooking oil, hurting the ordinary Iraqis whose support Mr. Sudani has been courting.

Mustafa Ghaleb Mukheef became Iraq’s central bank governor in 2020.


ahmed jalil/Shutterstock

Many Iraqis are blaming the U.S. for the dinar’s weakness. The New York Fed and the Central Bank of Iraq began enforcing tighter controls on international dollar transactions by commercial Iraqi banks in November in a move to curtail money laundering and the illegal siphoning of dollars to Iran and other heavily sanctioned Middle East countries, The Wall Street Journal reported last week.

Since the procedures went into effect, 80% or more of Iraq’s daily dollar wire transfers, which previously totaled over $250 million some days, have been blocked because of insufficient information about the funds’ destinations or other errors, according to U.S. and Iraqi officials and official Iraqi government data.

Iraqi banks had operated under less stringent rules since shortly after the 2003 U.S. invasion that toppled

Saddam Hussein.

Years of weak governments and crises—from the insurgency during the U.S. occupation to Islamic State’s takeover of large portions of the country—led successive administrations to put off bringing Iraq’s banking system into compliance with global money-transfer practices until now, officials said.

Mr. Sudani, who took office just as the currency began to drop, told the Journal that he would send a delegation to Washington next month with a proposal to temporarily end the tighter scrutiny of Iraqi transactions.

On Monday, Mr. Sudani sought to reassure Iraqis, saying the currency fluctuation was temporary and the exchange-rate should stabilize soon as the government takes steps to safeguard public money and prevent smuggling and money laundering.  

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