Iran Economy NewsRial rebounds against dollar in sanctions-hit Iran

Rial rebounds against dollar in sanctions-hit Iran

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AFP: Iran’s rial rebounded against the dollar on Tuesday as banks in the Islamic republic offloaded the greenback to curb the local currency’s recent steep losses triggered by sanctions, dealers said.

TEHRAN (AFP) — Iran’s rial rebounded against the dollar on Tuesday as banks in the Islamic republic offloaded the greenback to curb the local currency’s recent steep losses triggered by sanctions, dealers said.

The dollar was trading at around 10,750-10,800 rials compared with 12,500 on Wednesday last week when banks restricted the sale of foreign currencies to private individuals.

Long queues were seen on Tuesday outside several banks and official foreign exchange houses as dollars became freely available again.

Before banks began restricting greenback sales without any explanation last week, the rial had been trading at 10,500 to the dollar.

Economists had said the greenback’s scarcity was an indication the latest international sanctions against Iran for refusing to stop its controversial uranium enrichment work were beginning to hit the country.

They pointed in particular to the fact that Dubai, Tehran’s main trading partner, had stopped money transfers there since August after similar decisions by the United States and European Union.

On Tuesday, a dealer said this week’s large sell-off of the dollar was in fact an attempt to counteract the effect of sanctions.

“We do not have access to the outside world as we have difficulty in transferring money outside because of sanctions. This (selling of US dollar) is the (government’s) way of battling the sanctions,” he said, asking not to be named.

Iranian President Mahmoud Ahmadinejad said the volatility in the foreign exchange market was an attempt to hit the Islamic republic’s foreign trade activity.

“Some people tried to disrupt the exchange market through a propaganda campaign, so that the import and export sectors are hit,” he said in a speech in the northern Golestan province, adding the move would fail as “Iran’s foreign exchange reserves were spectacular.”

Another dealer predicted the price of the greenback would continue to fall.

“With measures taken by the government, the rate of dollar will drop every day,” said the dealer, who also declined to be named.

The recovery in the rial follows a statement last Thursday by central bank governor Mahmoud Bahmani that Iran intends to bring dollar rate down to 10,600 rials by around October 8.

Bahmani added that Iran has “increased its reserves” and would continue selling gold coins and foreign currency to professionals.

The central bank over the past few years has consistently ensured the Iranian rial remains bullish against foreign currencies.

However, a woman traveller said that “black marketeers were making a killing” in the current volatile foreign exchange trade.

“Most people in these queues are black marketeers. I am travelling outside Iran, but finding it difficult to get dollars from the dealer due to the crowd,” she said.

The UN Security Council imposed a fourth round of sanctions against Iran on June 9 over its uranium enrichment programme, which many Western states believe may mask a covert bid to make a nuclear bomb, a charge Tehran denies.

The United States and European Union have since unilaterally imposed even tougher punitive measures, adding provisions that penalise Tehran’s trading partners.

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