...

Rouhani’s dollar policy ahead of Iranian presidential elections

Business Materials 27 January 2017 10:25 (UTC +04:00)
Iran’s often bumpy foreign exchange market has been calmer over the past several days.
Rouhani’s dollar policy ahead of Iranian presidential elections

Baku, Azerbaijan, Jan. 26

By Farhad Daneshvar – Trend:

Iran’s often bumpy foreign exchange market has been calmer over the past several days.

The skyrocketing dollar slowed down over the past week in Iran’s free market as the greenback was traded somewhere between 38,000 and 39,000 rials.

Unlike the current trend, the value of US dollar against Iran’s national currency, rial, had earlier witnessed a considerable surge surpassing 40,000 rials, as the national currency in some days over the past month was quoted in the free market at 41,500 to the dollar.

Last December, the high dollar prices sparked harsh criticisms against the Iranian administration with a group of observers accusing the government of reaping the benefits of rial tumbling to a record low against the dollar in a bid to cover a part of its budget deficits.

Responding to critics, the government officials, including President Hassan Rouhani denied any involvement in decreasing the value of the national currency against the US dollar, vowing to take measures aimed at bringing the market under control.

US Fed Reserve to make Iran choose next monetary policy

US Fed Reserve to make Iran choose next monetary policy

The government asserted that the rise of 1,000 rials in the rate of the foreign currency was not acceptable, expressing hope that the dollar would ease soon.

Therefore, the administration immediately took a series of steps aimed at stabilizing the situation, including pumping dollar into the market and arresting several currency traders accused of destabilizing the market.

While a group of economists are against the government’s intervention in the currency market aimed at bringing down the dollar/rial exchange rate, others argue that the slide in rial could hurt the purchase power of ordinary Iranians.

The opponents of the government’s intervention have echoed warning that protecting the national currency against the dollar may inflict harm to domestic production as such policies would encourage imports.

However, Iranian economy largely relies on commodities as the country is a producer and exporter of crude materials and the World Bank has forecast strong gains for industrial commodities such as energy and metals in 2017.

Iran’s economic growth thrown into doubt by weak currency

Iran’s economic growth thrown into doubt by weak currency

When Rouhani took office in August 2013, the dollar had already hiked by 298.5 percent during his predecessor Mahmoud Ahmadinejad’s 2005-2013 term.

Despite severe sanctions and slumping oil prices the incumbent government has managed to stabilize the currency market.

The stabilization of the dollar rate is among President Rouhani’s "landmark achievements" ahead of this year’s presidential elections to be held in May.

Tags:
Latest

Latest