Iranian citizens lost 660 trillion rials assets on Monday

Dalga Khatinoglu, Trend Agency's Iran Service Department Chief

The amount of liquidity in Iran has been announced officially at four thousand trillion rials. On Monday morning each American dollar sold at 29,700 rials and then reached 35, 500 rials in the evening, indicating a 16.5 per cent drop in the national currency's value versus the USD. Regarding the amount of liquidity, namely citizens' cash assets in the country, Iranians lost 660 trillion rials between the morning and evening on Oct.1.

The Forex price fluctuation in Iran last occurred more than three decades ago after the Islamic Revolution occurred in 1979. Since then, the inflation rate in Iran has usually been above 10 per cent and Iran's rial value has decreased year-on-year versus the USD. However, slowly.

Iranian government during the past 33 years has kept the rial value artificially up by injecting billions of dollars from exported oil crude revenues to the country's economic vessels, but during last 18 months rial value drop has accelerated.

A USD in 1979 was sold at 100 rials. This figure increased gradually to 9,200 rials until 2005 when Mahmoud Ahmadinejad became president. The dollar was traded at 10,040 rials on the free market early last year. After this time, the drop in the USD rate in Iran accelerated and during last week the acceleration rate broke all records. During the past week the Iranian rial lost 30 per cent of its value.

The Iranian president who has repeatedly called the USD a "worthless piece of paper," is now faced with a more than 80 per cent drop in the rial's value, compared to the USD rate since early 2012.

It seems that western sanctions intended to curb Iran's oil revenues have affected Iran's economy which relies mostly on oil crude income. Half the Iranian government's annual revenue and 80 per cent of its exports fall to crude oil.

A huge rial value drop occurred during the past few months while with regarding Ahmadinejad Administration oil revenues during the seven year presidency, we find out that Iran had sold about one trillion dollars worth crude during the 33 years and more than half of this figure belongs to Ahmadinejad's presidency period.

Surveying OPEC's annual reports until 2011 shows the Ahmadinejad Administration has sold a little above 500 billion crude oil since 2005. During this period an injection of oil dollars among people with populist policies such as giving 20 billion dollars' worth of loans for jobless citizens, transferring about $3 billion cash monthly to subside to citizens' bank accounts, etc., led to an increase of a six-fold liquidity amount since 2005.

The Iranian economy has suffered from a high inflation rate and whilst the Central Bank announced the inflation rate as being at 24 per cent, the Iranian Parliament Speaker says it is about 29 per cent, while independent experts say it is above 40 per cent.

Now, Iran's oil export volume has been halted and selling Iranian oil through the USD is impossible as well as transferring the USD from outside into the country is very difficult.

Last week, Iran's Vice Parliamentary Speaker Mohammad-Reza Bahonar announced that Iran's oil exports have dropped to around one million barrels per day (bpd) during the first half of the solar year (started on March 19) on average, while this figure as of June and July had fallen to around 800,000 barrels per day.

Iran's oil export volume in 2011 was 2.3 million barrels per day of which 18 per cent was sold to European countries.

Follow us on Twitter @TRENDNewsAgency