With Iran’s economy already severely declining, the Iranian regime has decided to destroy it further by removing the official exchange rate, which currently sits at 42,000 rials to every dollar. President Ebrahim Raisi and his government have made this decision at a time where the national currency in Iran has hit a near all-time low, with 305,000 rials equating to a dollar.
Raisi’s predecessor, Hassan Rouhani. introduced the so-called ‘official exchange rate’ in 2018 to control inflation and skyrocketing prices of essential goods, such as medicine, wheat, and livestock imports.
At the time, Iranian state media, and even several regime officials, protested the official exchange rate saying that it would only increase the inflation rate and that it only worsened the regime’s internal corruption.
The Fars News Agency wrote last month, “Rouhani’s government was virtually incapable of controlling prices. Surveys show that based on the free-market exchange rate in that year, the importers embezzled around 5.1 quadrillion rials.”
To keep the official exchange rate, due to his government’s huge budget deficit, they had to resort to printing banknotes. This ultimately meant that Iran’s liquidity grew quickly, and due to the country’s low production rate, this liquidity set in motion inflation and skyrocketing prices.
One major reason behind the rapid plunge of Iran’s national currency is that over the past four decades, domestic production in Iran has been destroyed. Hundreds of factories and thousands of workshops have stopped working or been forced to close.
The regime has filled the production gap with imports and smuggling, thus wrecking the foundation of Iran’s economy. The regime needs mass currency for mass imports, which explains why it spends most of the country’s currency on imports.
Raisi’s government is now desperate to remove the official exchange rate, claiming that it is an attempt to combat corruption, however, the real motive is so that they can dig deeper into the pockets of Iranian citizens.
The regime previously intended to eliminate the official exchange rate during the last year of Rouhani’s administration, to earn an estimated 600 trillion rials, but the plans were never set in motion. However, if Raisi now decides to follow through with his decision, his government would earn around $2 billion due to the current free-market exchange rate of 305,000 rials to a dollar.
The removal of the official exchange rate will undoubtedly add to people’s economic woes and worsen the country’s financial crunch. Every day, people from all walks of life hold rallies, demanding their basic rights, back pay, and protesting the dire living conditions.
Since the beginning of 2021, four large-scale protests have taken place across Iran highlighting just how restive society is becoming after decades of anger and frustration aimed at the regime and its disastrous policies. Due to the heavy unrest in Iran, the regime fear another uprising akin to, or even worse than the major uprising in November 2019.
The removal of the official exchange rate makes it abundantly clear that the regime is neither willing nor capable of addressing the fundamental crises gripping the Iranian society. The mullahs in Tehran need every penny to fuel their machinery of suppression, terrorism, and war to preserve their fragile grip on power. The plight of the Iranian people is of no concern to them whatsoever.