Spillover effects from regulatory action against Al-Taif Islamic Bank have shaken Iraq's informal foreign exchange market, driving a short-term rally in the US dollar against the dinar, according to a former central bank executive.
Speaking to Shafaq News, former CBI Director General Mahmoud Dagher highlighted that a sudden dip in market sentiment and rising panic spurred increased dollar-buying over the last two days.
The volatility follows the Central Bank of Iraq's decision (No. 130 of 2026) to place Al-Taif Islamic Bank under administrative conservatorship following "major violations" that disrupted its financial status. The move led to system lockouts and card transaction failures, prompting street demonstrations by worried account holders and payroll clients outside affected branches.
CBI authorities—who deployed a regulatory management team on September 6, 2026—clarified that conservatorship aims to safeguard deposits and normalize operations rather than initiate liquidation, guaranteeing that customer balances will be released upon completion of regulatory reviews.
In the midst of the uncertainty, trading at Baghdad's central Al-Kifah Exchange saw the greenback climb to 155,600 IQD per $100 bill.
