Dollar costs 18,000 rials as Iranian budget projects price

Iran Materials 31 January 2012 16:35 (UTC +04:00)

Azerbaijan, Baku, Jan. 31/ Trend M. Moezzi

At the same time as the Iranian government announced the dollar's value was set at 12,000 rials in its budget for next year, currency traders have refused to do business at the government-mandated rates, the Jahanne Sanat newspaper reported.

On Jan. 28, the Central Bank set a single rate of 12,260 rials for the dollar. The measure was designed to stabilize Iran's foreign currency markets, which had seen wild fluctuations in past few weeks as worries about Iran's economy and international sanctions drove Iranians toward foreign currency and gold coin markets and pushed their prices to all
time highs.

In this year's budget, the dollar was pegged at 10,500 rials. However, its price has reached more than 20,000 rials. Although foreign currencies have had a floating exchange rate, market fluctuations over the last 10 months show that the Iranian government hasn't been successful in controlling the currency market, Jahanne
Sanat said.

The question is if the dollar is valued at 18,000 rials on the free market, why is its price set at less than 12,000 rials in the proposed budget, the newspaper reported.

Three days after the government's announcement that there would be a single rate set for foreign currency to bring down prices, currency traders still refuse to do business at that price. Meanwhile, their black market counterparts are selling the dollar at 18,000 rials.

Demand for the dollar increased from Saturday to Monday and black market money traders increased in number. Currency exchange bureaus sold old design Bahar Azadi gold coins for 8.4 million rials ($685 at the official dollar rate) and the new design coins for 8.3 million rials ($677).