On Tuesday, in the Iranian capital, money exchange shops offered around 140,000 rials for one US dollar, while the rate stood at 190,000 on Saturday. A downward trend in the price of foreign currencies in Iran pushed down the value of dollar in the unofficial market by almost 50 percent in less than 24 hours. Since Monday evening, people have been gathering, even at night, in the market to sell their dollars.
Foreign currency values began to boost in Iran after the US pulled out from the 2015 Iran nuclear deal in May and announced plans for a fresh wave of sanctions against the country. In the fear of plunge in the value of their assets, shocked by the rampant inflation rate and the unprecedented recession, ordinary people flocked to money exchange markets to exchange their dollars for rial at the time, the move which imbalanced the whole market.
Now, the loop is redirected due to the rush of individual owners of the greenback to the market, this time for exchanging dollar for rial. However, if this will be a permanent rally and whether the CBI’s targeted forex rates remain unclear because the US sanctions targeting Iran’s vital oil industry are to appear in early November. The CBI intends to announce the rate of exchange in the foreign exchange market at an appropriate time, Iranian officials say.
Analysts offer various reasons for this week’s rally of rial, among which stand six effective factors including:
* Europe’s decision for creating financial relations with Iran undependable to US,
* the plan of China and Russia for making separate financial relations with Iran,
* the probability of ratification of FATF by Iranian legislative institutions,
* having CBI appointed as the body in charge of monitoring the forex market via supervising banks and permitted exchange shops and controlling the exchange rate of hard currencies,
* the wait for Hauge Court’s verdict on Iran's demand for the suspension of nuclear-related sanctions imposed by the United States that will be announced on Wednesday, and
* Government’s act of appointing a new economic team.
In fact, Rouhani administration has tried several solutions to shield from US economic sanctions, specifically the depreciation of its rial over the past few months.
A day after the central bank was given more powers to intervene in currency markets, Iran’s Judiciary sentenced three people, one of them called ‘Sultan of Coins’, to death convicted of economic corruption including causing disorder in the country’s gold coin and foreign exchange market.
It can be also referred to the CBI’s decision for launching a secondary currency market on July 3, 2018, in a bid to renovate its foreign currency system, reign the currency rates, reinforce exports, improve cooperation with foreign currency exchange shops, and to ease a dollar shortage ahead of the new turn of US sanctions. The government also unveiled a package of policies to strengthen the rial.
The Ex-head of Tehran's Chamber of Commerce Yahya Al-e Eshaq put the real rate of rial to US dollar at 70,000 on Tuesday calling for the administration to increase its control over domestic forex market, as he expressed the forex rate bubbles were created due to psychological factors and foreign ones.
MNA/TT