ERBIL, Kurdistan Region of Iraq – Iraqi Prime Minister Ali al-Zaidi said Friday his government is seeking to increase US cash dollar shipments to as much as $2.5 billion to narrow the gap between Iraq’s official exchange rate and the parallel market rate.

“The government is working quietly to address the gap between the official rate and the market rate,” Zaidi said in an interview with state media that aired Friday, adding that “the dollar rate may return in the coming period to 155,000 dinars per $100 or less.”

Earlier this month, Iraq devalued its currency, raising the official cash selling rate from 1,320 to 1,520 dinars per US dollar. The parallel market rate subsequently climbed above 170,000 dinars per $100, compared with 163,000 dinars the previous night.

The move came as the US-Israeli war against Iran disrupted oil exports, widening pressure on the government’s budget.

“The government is working to increase the quantities of cash dollars coming into Iraq, which would contribute to narrowing the gap between the official rate and the parallel rate,” Zaidi said.

The US cash shipments are physical dollar deliveries tied to Iraq’s oil revenues, which are held in an account at the Federal Reserve Bank of New York. Washington reportedly halted a shipment worth about $500 million in April amid pressure on Baghdad to curb the activities of Iran-backed armed groups and prevent illicit financial flows. Shipments continued in stages, with a new delivery arriving in Iraq on September 30, following understandings reached between Zaidi and US officials, according to Iraqi government spokesperson Haider al-Aboudi.

Zaidi said on Friday that the dollar could have reached 152,000 dinars per $100 without “the current regional circumstances,” adding that the US Federal Reserve had concerns about supplying Iraq with large quantities of physical dollars.

He said those concerns stem from fears in Washington about “the possibility that part of the cash dollars would reach the [armed] factions and be used in prohibited activities.” He added that Baghdad had “explained the reality of the internal situation to the American side many times.”

Washington has imposed sanctions and financial restrictions while pressing Baghdad to rein in Iran-aligned armed groups that have attacked US interests during the war.

Zaidi said shipments had been halted for months before his government took office on May 17. Following talks with Washington, deliveries resumed at around $140 million per month before increasing to $500 million.

“We are working in the current days to raise it to one billion dollars,” he said, adding that the government was seeking more than $1 billion and working to secure some shipments worth $2.5 billion to increase the supply of cash dollars in the market.