Iraq's central bank has eased restrictions on the sale of dollars in a step likely to boost the dinar currency, according to senior banking officials.

The central bank tightened rules in April over who could participate in its daily dollar auctions and the amount they could buy, seeking to stabilise the dinar and stem the illicit transfer of US currency to neighbouring countries under sanctions.

Reversing those moves, the central bank said it would double lenders' weekly share of cash and allow them to determine the price, which was previously fixed at 1,189 dinars to the dollar.

The steps were taken because the dinar-dollar exchange rate is now stable and better implementation of anti-money laundering regulations will prevent dollars being sold on to countries under sanctions, Central Bank Deputy Governor Mudher Kasim said.