The Central Bank, its coffers awash with hard cash, has persuaded seven private banks to sell the greenback at the official rate of 1,179 Iraqi dinar for each dollar, Central Bank Governor Mudher Saleh said.

Saleh said the crisis that hit the Iraqi dinar a few months ago, causing a sudden depreciation of its value, was over.

He said his bank’s hard cash reserves have reached $63 billion. Previously, Iraqi private banks refused to sell dollars at the official rate, fearing the bank’s inability to furnish them with enough hard cash.

But Saleh said the banks now realize how strong its assets and reserves have become. “Our reserves are enough to meet demand for hard cash,” he said.

There are 40 private banks in Iraq and Saleh said he was confident that all of them would agree to Central Bank conditions to sell dollars at the official rate.

The banks buy dollars at rates below the official price and are allowed to take a nominal charge for each dollar they sell. It is currently set at 10 dinars for each dollar they sell.

Saleh described the dinar’s crisis which saw its value tumbling vis-à-vis the dollar as “a price bubble caused by speculations fueled by monopolistic powers inside the economy.”

When the dinar slumped to nearly 1,300 to the dollar, Central Bank officials blamed rising demand for hard cash from the sanctions-hit economies of both Iran and Syria.

“The price bubble is over and both the private and state banking sectors are called upon to cooperate for the sake of economic stability in the forefront of which comes the stability of the local currency and its exchange rate,” Saleh said.

Iraq, June 5, 2012