Baku, Azerbaijan, April 9
By Farhad Daneshvar – Trend:
Despite promises by President Hassan Rouhani and the central bank governor, Valiollah Seif, to protect the country’s national currency, the US dollar is rallying in the Iranian free market.
Iranian rial hit an all-time low against the US dollar on Monday and fell to 6,460 by afternoon on the unregulated currency market.
“We admit this is not a proper situation and it is against our wishes. We have, so far been, unsuccessful [in controlling currency market]. We will surely employ all capacities of the system to deal with the situation, and God willing, we will bring about balance to the market,” Government Spokesman Mohammad Bagher Nobakht told reporters on April 9.
Psychological behavior, growth in demand, getting assets out of the country, political tensions as well as security concerns and risk of military confrontation are believed to be among the main reasons behind the sharp plunge of the value of Iran’s national currency.
Meanwhile a group of observers still believe that the government has deliberately engineered the slump in the value of the rial in order to deal with the ongoing monetary crisis, as the currency market seems to be getting out of control of the Central Bank of Iran.
Although an alleged devaluation of the national currency may contribute to covering the government’s budget deficit, the unexpected depreciation will definitely bring great discredit upon President Rouhani, who promised to bring stability to the economy and the currency market.
In the meantime, an Iranian petrochemical company has supplied the US dollar in the market in order to cover the shortage of this foreign currency.
“Through the central bank, Jam Petrochemical Company has supplied its US dollars, obtained from exporting products, at the currency market in order to confront with unauthorized dealers and support the national economy,” Hossein Mirafzali, the head of the petrochemical company, told ISNA news agency.
Back in February, the US dollar for the first time breached 50,000 Iranian rials when police in collaboration with the Central Bank of Iran arrested at least 90 currency traders, whom it blamed for deliberately driving the devaluation in order to profit from it.
The Central Bank, in a move to stabilize the currency market, issued a bond and temporarily allowed banks to increase rates on deposits in order to draw investors away from the US dollar.
The fragility of the nuclear deal has apparently worsened the situation in the Iranians currency market.
The May 12 deadline, on which US President Donald Trump must sign a presidential waiver on sanctions on the Islamic Republic is looming, and fears have gripped the supporters of the 2015 nuclear deal that the Trump may tick the nuclear pact off and re-introduce sanctions against the Islamic Republic.
On the other hand, supporters of the President Rouhani’s administration have implicitly accused the opponents of the reformist-backed president of organizing conspiracy in an attempt to stir up social and political unrests in the country.
“The police and security bodies should become accountable for this situation, because no special development has taken place in the country’s economy,” Iranian Economy Minister told reporters on Monday.
Farhad Daneshvar is the head of Iran Desk at Trend Agency, follow him on Twitter: @Farhad_Danesh