US agrees to continue physical dollar cash shipments, Iraqi government says

Iraq said Saturday that it had reached an agreement with the United States to continue shipments of physical US dollars to Baghdad, with another delivery expected within days, after Washington disrupted the flow earlier this year as it pressed the Iraqi government over Iran-backed armed groups and illicit dollar transfers.

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Iraqi government spokesperson Haider al-Aboudi said the understanding was reached during Iraqi Prime Minister Ali Faleh al-Zaidi’s visit to the United States and would help Iraq meet legitimate demand for foreign currency.

“A new shipment will arrive in the coming days,” al-Aboudi said.

He said the agreement followed Iraqi steps to tighten oversight of dollar distribution, regulate the use of foreign currency, reduce misuse of the financial system and expand electronic payments.

The United States halted an expected shipment of roughly $450 million to $500 million in physical currency in April as part of pressure on Baghdad over attacks by Iran-backed armed groups. At the time, an Iraqi central bank official said an April shipment had not arrived, and the status of another expected in May was unclear. Electronic dollar transfers used for imports and trade were not affected.

Limited US dollar shipments to Iraq resume in July

Some cash deliveries resumed by early July. Reuters reported on July 2, citing The New York Times, that limited air shipments of US dollars had restarted after the several-month pause. Reuters said at the time that it had not independently verified the resumption.

The latest Iraqi announcement goes further, presenting the continuation of cash shipments as an agreement reached with Washington and saying another shipment is expected within days.

The currency comes from Iraqi oil revenues held through the Federal Reserve Bank of New York. Iraq keeps more than $100 billion in reserves in the United States, giving Washington substantial influence over Baghdad’s access to physical dollars.

The US has also sanctioned Iraqi banks accused of facilitating transactions benefiting Iran, while Iraqi authorities have introduced tighter financial controls intended to curb illicit dollar flows.

Iraq remains closely tied economically to neighboring Iran, with bilateral trade worth more than $10 billion annually.

The value of the next cash shipment and its precise delivery date were not disclosed.