ERBIL, Kurdistan Region of Iraq – The Central Bank of Iraq (CBI) on Wednesday said it is reducing the foreign exchange allowance of citizens traveling abroad from $3,000 to $2,000 a month, saying the move is intended to promote electronic payment methods and ensure a fairer distribution of foreign currency.

The move “is part of a package of regulatory reforms” implemented by the Bank and aims to enable Iraq to keep pace with global developments in payment systems by “encouraging the use of electronic payment cards… which enhances the transition to the digital economy,” the CBI said in a statement. 

The travel allowance has helped Iraqi citizens mitigate the gap between the official exchange rate and the parallel market rate while abroad. The CBI has fixed the official exchange rate at 1,320 dinars per US dollar, while the parallel market currently trades the dollar at around 1,540 dinars.

The disparity between the two rates has long been exploited by individuals exploring various methods to acquire dollars at the official rate and reselling them on the parallel market for a profit.

The allowance was initially set at $7,000 per traveler in 2023 but has been reduced several times amid reports that the higher quota was being abused, as Iraq has struggled to curb the smuggling of US dollars to neighboring countries, including Iran.

A 2023 report by Middle East Eye said Iraqis were offered free trips to destinations including Dubai, Turkey, Iran, and Lebanon in exchange for withdrawing $7,000 abroad. The report said smugglers and currency exchange companies approached travelers seeking to use their identities to obtain cash at airports in return for payment.

In October 2025, Iraq’s Central Bank issued a new set of measures to tackle foreign currency smuggling and money laundering, including a requirement that businesspeople submit detailed receipts for purchases made abroad before transferring funds outside Iraq. 

The latest decision comes as Baghdad is seeking to tighten oversight of the financial sector.

Iraqi Prime Minister Ali al-Zaidi, who is scheduled to visit Washington later this month, recently replaced former CBI Governor Ali al-Alaq with Nizar Nasser, a longtime central bank official who previously headed the bank's anti-money laundering and counterterrorism financing department.