Shafaq News/ Prime Minister Mohammad Shia al-Sudani will ask Paris to mediate ease of the restrictions introduced by the New York Federal Reserve on international dollar transactions by Iraqi commercial banks, a source revealed on Thursday.

"Prime Minister al-Sudani will ask France to mediate between Iraq and US," the source told Shafaq News Agency, "the dollar crisis is becoming a concern for al-Sudani and the Coordination Framework. If left untreated, the crisis might topple al-Sudani's government prematurely."

Under pressure from Washington to stem the flow of dollars into Iran, Iraq's prime minister sent elite counter-terrorism forces more accustomed to battling Islamist militants to shut down dealers smuggling the currency to the Islamic Republic.

Saturday's raids in Baghdad represent an early test for Prime Minister Mohammed al-Sudani, who took office in October after more than a year of political paralysis and must now tread a delicate diplomatic path.

The Federal Reserve's move was designed to stop the illegal siphoning of dollars to Iran and apply more pressure along with U.S sanctions imposed over Tehran's nuclear program and other disputes, leaving Tehran struggling to source dollars.

The head of al-Fatah bloc, Hadi al-Ameri, accused Washington of deliberately using the new regulations as a political weapon.

A senior banking official said the United States sent a clear message to Iraqi officials: comply with the new regulations, or the Iraqi central bank will face fines.

Al-Sudani is reliant on Washington's continued goodwill to ensure his country's oil revenues and finances do not face U.S. censure, and also needs Washington's help in battling Islamic State militants.

But he came to power with the support of powerful, Tehran-backed militias and so cannot afford to alienate Iran.

Under the new restrictions, Iraqi banks must use an online platform to reveal their transactions, disclosing details on the sender and beneficiaries. U.S. officials can object to suspicious transfer requests.

The new system has slowed down dollar transactions and left a hole in public finances. Banks that abstained from registering on the online platform resorted to the free markets in Baghdad to buy dollars, creating shortages as demand outstripped supply.

Meanwhile, the price of consumer goods has increased and the Iraqi currency has taken a beating.

And it has deepened anti-American sentiment among politicians in Iraq, which remains unstable nearly 20 years after a U.S.-led invasion toppled Saddam Hussein

The Iraqi dinar had been selling at 1,470 dinars against the dollar before the new Fed transfer restrictions, falling in December to lows around 1,620 dinars per dollar before the crackdown began at the weekend.

The Iraqi prime minister replaced the central bank governor after the slide in the dinar. Mustafa Ghaleb Makhif told him he no longer wanted to stay in the job.

Al-Sudani has tried to reassure Iraqis that their dinars and economy will be well protected from the crackdown and U.S. regulations.

"We have taken a set of bold decisions to strengthen and stabilize the Iraqi dinar, and we warn whoever tries to exploit the crisis," he said at an event on Saturday.