USD exchange rate dropped 5.6 percent in Iran over past year

Business Materials 6 September 2014 12:00 (UTC +04:00)

Baku, Azerbaijan, Sept.6

By Fatih Karimov - Trend: The US dollar exchange rate has dropped 5.6 percent in Iran over the past year.

Abolfazl Akrami, the director general for economic affairs at the Central Bank of Iran, said the USD exchange rate fluctuations have been minimized over the past 12 months, ending August 22, Iran's IRNA news agency reported on September 6.

He added that the official and the street rates of USD will probably be unified in the next year.

Analysts establish the fact that the Iranian rial has lost about 10% of its value (it's now trading at about 32,000 to $1) since the beginning of the current Iranian year (March 21, 2014) is not a positive sign for a government that pledged to stabilize the country's economy.

In April 2013, the rate stood at about 35,000 rials to $1 and then rose to a peak of about 39,000 before the June 2013 elections, but fell to 29,700 in January 2014.

In early May, amid the unstable currency rates, Mohammad Nobakht, vice president for planning and strategic control, predicted that the exchange rate of the rial would stabilize and fall close to 26,500 rials to $1. He seemed to suggest that the government will aim to unify the existing two rates and achieve 26,500.

The official rate, which is also referred to as the forex chamber rate, stands at 25,000 rials to $1.

However, the government would have to actively intervene by injecting hard currency into the market in order to achieve such appreciation by the rial on the free market.