This latest action follows Baghdad's banning of international flights to Kurdistan's airports on Friday.

"The condition for ending the dollar sale prohibition is to have the Kurdish banks under the central bank's control," an unnamed Iraqi official was quoted by Reuters as saying.



A Kurdish official in Erbil, however, told the same agency that Kurdistan's banks are already reporting to Iraq's central bank in Baghdad.



Baghdad's latest action is likely to squeeze foreign workers in Kurdistan, whose pay and remittances are usually given in dollars.

The new sanctions will add further inconvenience for expats , who are already having to take longer routes and pay higher travel fares to find alternative routes to Iraqi Kurdistan.

The move comes after Iraq's parliament voted on Tuesday to impose financial sanctions that will target the Kurdish leadership, while ensuring to "preserve the interests" of the region's citizens.

Baghdad's Arab-led government has rejected offers from Erbil to discuss Kurdish independence, maintaining its non-recognition of the referendum and its result.



Iraq has been joined in imposing sanctions on Iraqi-Kurdistan by Iran and Turkey, which also have significant Kurdish populations.