ERBIL, Kurdistan Region - The Kurdistan Region’s finance ministry has authorized the use of the Ibrahim Khalil border crossing with Turkey to facilitate the transfer of US dollars to traders, in a move aimed at circumventing a decision by the Iraqi federal government that has restricted traders in the Kurdistan Region from accessing US currency since January, an issue that has caused food price hikes.
“The suspension of US dollar transfers to traders through banks by Iraq’s federal government since the beginning of January has disrupted trade activity, reduced revenues, and led to a spike in food prices in the Kurdistan Region,” the finance ministry said in a statement on Monday.
The ministry said it has therefore enabled traders to access US dollars through the Ibrahim Khalil border crossing as a temporary measure to bypass Baghdad’s decision.
“To resolve this problem, talks are ongoing with the federal government of Iraq. Until a final solution is reached, you are authorized to allow the transfer of dollars to traders through the Ibrahim Khalil crossing,” the ministry said.
The transfers will only be permitted under specific conditions.
Before accessing US dollars through banks, traders must “submit a formal request along with receipts for their purchases abroad and a commodities manifest verifying that the imported goods and services have entered the country,” the ministry added.
The Central Bank of Iraq (CBI) introduced strict new measures that took effect on January 1, 2026, requiring traders to pay customs duties in advance before gaining access to US dollars at the official exchange rate. The move is part of a broader strategy to formalize trade, transition to a digitized financial system, and reduce reliance on cash dollars.
However, the measures have significantly limited traders’ ability to obtain US currency through banks.
One US dollar is officially exchanged at 1,320 Iraqi dinars, but on the black market it was trading at around 1,540 dinars on Monday.
Access to US dollars and an end to attacks on the Kurdistan Region since the outbreak of the Iran war in late February are among the key conditions set by the Kurdistan Regional Government (KRG) for allowing the export of Iraq’s oil through the Region’s pipeline to Turkey’s port of Ceyhan.
Baghdad earlier said it had requested to export up to 300,000 barrels of oil per day through the pipeline if Erbil allows federal authorities to use the route, in addition to roughly 200,000 barrels produced in the Kurdistan Region.
The KRG’s natural resources ministry on Sunday accused Iraq’s federal oil ministry of distorting facts regarding the issue of exporting oil through the Region’s pipeline to Turkey’s Ceyhan port, insisting that Baghdad is maintaining a “suffocating embargo” on the Kurdistan Region and has failed to confront attacks by Iran-aligned armed groups targeting the Region’s energy infrastructure.
The dispute comes as oil exports from the Kurdistan Region have largely halted due to repeated drone and missile attacks on energy infrastructure. The strikes have been blamed on pro-Iran armed groups in Iraq, which say the attacks are linked to Tehran’s confrontation with Washington and Tel Aviv.
Since the outbreak of the Iran war in late February, Tehran and its allied armed groups in Iraq have carried out more than 300 drone and missile attacks on alleged US targets and energy facilities in the Kurdistan Region, causing casualties and injuries.