The Central Bank of Iraq has notified to all banks in the country that using dollars with Iranian banks has been banned.

“While there are sanctions on Iran, it will be difficult to preserve the trade relations [with Iran],” Iraqi government spokesman Saad al-Hadithi said.

New methods will be applied to ease the effects of the sanctions on trade, al-Hadithi added.

On Tuesday, the US had re-imposed the first round of economic sanctions on Iran, which mainly target the country’s banking sector.

The sanctions are intended to hinder Tehran’s acquisition of US currency; its precious metals trade; bank transactions denominated in the Iranian rial; activities related to Iran’s sovereign debt; and the country’s automotive sector.