The decision that was issued on Sunday is part of efforts to close the gap between the official exchange rate and that on the black market. The Iraqi Central Bank currently sells $1 for 1,320 dinars, while on the black market, it is sold between 1450-1480 dinars.
According to the interior ministry, anyone who violates these instructions will be imprisoned and will have their showrooms closed down.
"This campaign will continue in the next week, God willing, and in an intensive manner," Brigadier General Hussein Ali al-Tamimi, Director of Operations of the Directorate of Combating Organized Crime in the Iraqi Interior Ministry, told Rudaw’s Anmar Ghazi on Monday.
Tamimi added that their campaign has been successful to impose the decision "in more than 75 percent of car showrooms in Baghdad and other provinces."
The decision has not been imposed in the Kurdistan Region and Kurdish authorities have not commented on the matter.
Hajj Fadel has been trading in the car market for more than three decades. He complained about the weak market movement since the decision has been made.
"The market had already been too weak, and this decision made it worse. There is no movement in it. The decision affected the customer and us as well, but we have borne the brunt of the damage," Fadel al-Janabi, the owner of a car dealership in Baghdad, said.
He went on to complain that they "import cars from outside Iraq in dollars and the outsiders do not agree to deal in Iraqi dinars."
The government plans to control the dollar and strengthen the value of the Iraqi dinar, by expanding the scope of its commercial uses, in addition to preventing the smuggling of the dollar abroad and limiting the exchange rate manipulation.
In December of 2020, Iraq’s central bank announced devaluing the country’s currency in an effort to combat a national liquidity crisis and bring in much-needed cash to the government’s coffers.
The devaluation of the dinar struck the public hard as government employees get paid in dinar, and they would be able to afford less with their salaries given that many imported goods are paid for in dollars.
The devaluation of the Iraqi dinar is a step taken towards reform and creating a “financial balance” and will revive the economy, former Finance Minister Ali Allawi said at the time.
In mid-August of last year, a member of the parliament’s finance committee said the dinar-dollar exchange rate will be fixed for the next five years.
