Iran’s currency Rial has plunged to a record low against world’s reserve currency US Dollar. Iranian policy makers and its Central Bank have come out measures which aim at cooling down demand for foreign currency from savers who are worried about inflation and country’s economic prospect.
Iran’s Rial sinks to a record low against US Dollar
Inflation in Iran is running at more than 50 per cent and Rial traded at 5,75,000 on the unofficial free market against the dollar. This has caused panic among common Iranians who have been trying to protect the value of their savings by buying foreign currency or gold.
In order to cool the market and ease demand for dollars, the Iranian Central Bank has lifted the ban on private exchange shops selling hard currencies. Only last week an exchange centre was opened , which allows ordinary Iranians to purchase the foreign currency.
Economic Website Ecoiran stated,
“While some analysts expected that, with the opening of this centre, emotional trading on the free market would decrease, the dollar continued its upward movement … and the fervour has become even more intense on the futures market,”
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Reasons for Iran’s Economic Meltdown
Since September , the Rial has lost nearly 45 per cent of its value due to nationwide protests following the death in police custody of a young Kurdish Iranian woman.
Unrest has been one of the biggest challenges for Iran’s theocratic rule, which was established in 1979 in the aftermath of Islamic Revolution.
Foreign exchange traders have revealed that rial’s depreciation has been due to following factors:
- Recent unrest in Iran
- Iran’s increased isolation in face of Western sanctions over human rights
- Russia’s use of Iranian made drones in Ukraine
- Reimposition of US sanctions in 2018 by then US President Donald Trump has harmed Iran’s economy limiting Tehran’s oil exports and access to foreign currency
In Iran, since September , the nuclear talks with world powers to curb Tehran’s nuclear program in exchange for lifting of sanctions have stalled , which is causing meltdown of Iranian Economy.
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