Iranian rial plummets to new low as currency crisis deepens

Iran’s currency plunged to a new low against the US dollar yesterday, dragged down by worsening confidence in the state of the nation’s economy following the re-imposition of sanctions by the United States.

The dollar strengthened as much as 8 per cent to 150,000 rials, according to Bonbast, a website that tracks the unofficial currency market.

Many exchange shops in Tehran simply turned off their electronic signs showing the rate for the US dollar. Some Iranians who wanted hard currency sought out informal money traders on street corners.

“Everyone’s just nervous,” Mostafa Shahriar, 40, who was seeking dollars, told AP.

The rial has lost about two thirds of its value against the dollar since January 1.

Growing demand for dollars stoked by concerns that the effect of US sanctions would spill beyond the country’s crude shipments and affect Iran’s broader export sector also added to the white-knuckle ride for rial traders.

Authorities are trying to curb the foreign exchange crisis, cracking down on traders and currency exchanges, which they accuse of hoarding dollars and creating an artificial crunch. But nothing the government has done so far has helped, as sanctions pressure mounts by the day.

Ever since the rial began its slide, people have been trying to hedge by withdrawing cash from banks and buying gold and major currencies – including dollars, euros and sterling to protect the value of their capital.

The government and politicians have also shaken up financial policy in recent months in a failed attempt to calm the markets.

The Iranian parliament last week sacked the minister of economic affairs and finance, the latest official to lose his job in a series of high-profile changes. His departure follows the removal of the minister of labour last month and a change of guard at the country’s central bank in June.