Iranian rial loses 18% of its value in two days

July 31, 2018 7:50 pmComments Off on Iranian rial loses 18% of its value in two daysViews: 34

Iranian rialIranian rial continue depreciation, as it has lost 18% of its value for two days before the expected renewing of US sanctions against Tehran on August 6. Since the beginning of the year, the Iranian rial has lost nearly two-thirds of its value.

Today, in the parallel market, one US dollar was exchanged for 119,000 rials compared to 100,000 rials on Sunday. On January 1, 2018, the exchange rate was 42,900 rials for one dollar.

In this context of a severe currency crisis, Iranian President Hassan Rouhani last week replaced the Governor of the Iranian central bank, Valiollah Seif, with Abdolnaser Hemmati, who headed the state insurance company.

Yesterday, the central bank announced that the instability of the national currency was due to an “enemy conspiracy” and pledged new measures “in the coming days” to counteract the downturn.

The government tried to halt the depreciation of the national currency in April, setting a fixed exchange rate of 42,000 rials per dollar and threatening dealers working on the black market.

The banks, however, refused to sell their dollars at this artificially low rate and the authorities were forced to mitigate their position, allowing for more flexible conditions for some importers.

The instability of the Iranian national currency is linked to the unilateral withdrawal of the United States from the international nuclear agreement for Iran, which provides for the lifting of international sanctions against Tehran in exchange for limiting its nuclear program.

According to the International Atomic Energy Agency (IAEA), the Iranian authorities respect the terms of the agreement. The US President Donald Trump, despite criticism, has decided to get Washington out of the deal and to restore sanctions against Iran in two stages – August 6 and November 4. The EU, Russia and China continue their commitment to the agreement.

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