Iranian Rial Hits Record Low against Dollar

Iranian Rial Hits Record Low against Dollar

Monday, 3 September, 2018 - 18:00
A money changer holding foreign banknotes at the Grand Bazaar in Tehran. (Reuters)
Asharq Al-Awsat
The Iranian rial hit a historic low against the US dollar on Monday as the country’s economy continues to crumble.

The rial has lost around 15 percent of its value on the open market in the past three days, bottoming at 128,500 to the dollar by Monday evening, according to Bonbast.com, which monitors Iran's rates.

The drop followed a speech by central bank governor Abdolnaser Hemmati on Saturday, in which he announced tighter restrictions on allocating foreign exchange reserves, said financial journalist Maziar Motamedi.

"Hemmati said that he wishes to be much more careful in allocating foreign currencies at government rates, signaling a potential forthcoming shortage of hard currency," he told AFP.

The rial has lost 70 percent of its value in the past year, primarily due to increased hostility from the United States and its withdrawal from the 2015 nuclear deal in May.

Official statements have done little to calm the markets.

Hemmati, who took over in August after his predecessor was sacked, "seems to have had a point when he said in (his inaugural speech) that he will try to minimize public remarks, as every comment coming from high-ranking officials aiming to calm the market has spurred negative reactions," said Motamedi.

The central bank has tried to calm the market, first by trying to end open-market trading in April, fixing the rate at 42,000 and shutting down exchange shops.

But that only sparked huge speculation and corruption on the black market, leading the government to sack the central bank chief and reverse the April measures.

Last week, Iran’s parliament sacked the minister of economic affairs and finance. In early August Iranian lawmakers voted out the minister of labor.

Protests linked to the tough economic situation in Iran erupted last December, spreading to more than 80 cities and towns and resulting in 25 deaths.

Sporadic protests, led by truck drivers, farmers and merchants in Tehran’s bazaar, have continued since then and have occasionally resulted in violent confrontations with security forces.

A set of US sanctions targeting Iran’s oil industry is due to take effect in November.

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