Expert warns CBI $3,000 traveler quota will drain reserves

The new headquarters of the Central bank of Iraq (CBI). Photo: Zaha Hadid Architects Baghdad (IraqiNews.com) – Iraqi economic expert Ziyad Al-Hashemi issued a sharp warning regarding the Central Bank of Iraq’s (CBI) decision to raise the official cash dollar quota for outbound travelers from $2,000 to $3,000 per trip, arguing that the policy will needlessly erode sovereign foreign currency reserves while failing to address the fundamental structural drivers of parallel market dollar demand. The Central Bank’s decision followed deliberations by the Ministerial Council for the Economy in Baghdad, attended by key cabinet ministers and senior financial officials to review currency volatility. The measure comes less than three weeks after the CBI announced a regulatory framework on October 15, 2026, which had capped the traveler allocation at $2,000 every two months, with an annual ceiling of six disbursements. In an analytical statement published on his social media platforms, Al-Hashemi characterized the reversal as institutional capitulation to government political pressure. He described the move as a short-sighted monetary intervention intended to narrow the spread between the official peg (1,520 IQD per dollar) and the parallel rate (trading near 1,680 IQD) by injecting additional physical banknotes into the market. Al-Hashemi stressed that while the increased allocation may generate a modest, short-lived dip in the parallel exchange rate, it exposes the treasury to net losses amounting to tens or hundreds of millions of dollars without absorbing parallel demand. He argued that the parallel rate will quickly rebound under any fresh surge in commercial demand or regional geopolitical volatility. Instead of draining cash reserves through informal secondary market leakage, Al-Hashemi contended that monetary authorities should prioritize resolving compliance bottlenecks for commercial wire remittances. By broadening trade finance facilities and removing operational barriers for merchants, the central bank could systematically redirect legitimate commercial demand into formal banking channels rather than subsidizing cash transactions that ultimately feed parallel liquidity.