The financial adviser to the Iraqi prime minister, Mudher Mohammad Saleh, said the return of Iraqi banks to international financial transactions will strengthen confidence in the banking sector, expand official channels for obtaining US dollars, and help stabilize the exchange market by reducing reliance on the parallel market.

International Banking Access to Strengthen Official Dollar Channels

Speaking to the Iraqi News Agency (INA) on Monday, Saleh said reconnecting Iraqi banks with international financial transactions will enable them to carry out external transfers directly while increasing the confidence of correspondent banks and investors in Iraq's banking system.

He said the move will expand official channels for securing US dollars to finance trade and imports, reducing the need for merchants and companies to obtain foreign currency through the parallel market.

Exchange Rate Stability Depends on Broader Reforms

Saleh stressed that the stability of the dollar exchange rate in the parallel market depends on more than the return of banks to international transactions.

He said key factors include banks' ability to meet genuine demand for foreign currency, effective measures to combat smuggling and money laundering, the Central Bank's continued management of foreign currency flows, stronger confidence in the banking sector, and stable economic and political conditions.

Banking Reforms Key to Narrowing Exchange Rate Gap

According to Saleh, combining the return of Iraqi banks to global financial networks with comprehensive banking and regulatory reforms, expanded trade finance services, and fewer restrictions that push traders toward the parallel market would significantly reduce the gap between the official and parallel exchange rates.

He added that addressing longstanding structural challenges within Iraq's banking system would increase the impact of these measures, further supporting exchange rate stability and creating conditions for a sustained decline in the parallel market dollar rate.