Iranian rial continues to decline as new sanctions loom
Tehran, Iran, July 31
By A. Shirazi - Trend:
The US dollar jumped to as much as 120,000 rials in the open market in the Iranian capital city of Tehran on Monday night.
According to reports, a US dollar and the euro, respectively, traded for 118,000 and 138,000 rials in the open market on Monday. A dollar was worth 36,000 rials in mid-September.
One of the main reasons behind the recent fluctuations in Iran’s foreign exchange market is due to fears of new US sanctions scheduled to kick in in August and November.
US President Donald Trump withdrew from the Iran nuclear deal in May, and Washington now plans to reimpose sanctions on Tehran next month. The first round of US sanctions on Iran goes into effect in August, followed by ones targeting Iran's oil exports in November.
On concerns over a return of sanctions, the rial plunged to an all-time low on April 9. In an attempt to stop the fall, the administration of President Hassan Rouhani held an emergency meeting and decided to unify the country’s official and open market exchange rates.
Following the meeting, the government announced the price of the dollar would be 42,000 rials in both markets, and for all business activities.
The move by the government failed to bring back clam to Iran’s foreign exchange market as prices continued their skyrocketing trend. Later, the government launched a secondary currency market to ease tensions around the prices of the US dollar, but after a while it also failed to stop the Iranian rial plunge to a record low.
In the capital, licensed exchange offices and unlicensed street traders are still not allowed to buy and sell dollars and people can only get the US currency from banks. Now black market trading is gaining momentum in the country as banks cannot address people’s needs.
Iran has ditched the US dollar and replaced it with euro as part of its plan to stabilize the currency market and reduce the country’s reliance on the American currency, but no success.
According to reports coming out of Tehran, the gold coin bubble in Tehran's market was also inflated with Emami gold coin registering a rise of 15 million rials and selling for 45 million rials.