Iranian currency falling to record lows
Iranian currency falling to record lows
Posted 02/12/2014 09:41 AM
Tehran / Reuters
Resulted in the decline of oil prices and the failure to reach a nuclear deal to the Iranians rush to sell the local currency out of fear for their savings. This prompted the riyal to the loss of more than 10 percent in one week.
Iranian Minister of Economy warned paranoid rush to sell rial after the Iranians to accept the sale to buy foreign currencies at the weekend with the fall in oil prices and the failure to reach a final agreement on Iran’s nuclear program with world powers.
The riyal has descended yesterday on the black market to about 35.6 thousand riyals to the dollar, down more than 10 percent in one week.
Iranian Students News Agency reported that the riyal was at its lowest level against the US currency in more than a year.
It quoted the official media for Economy Minister Tayyip Nia Ali as saying, “There were no major changes on the foreign exchange markets, investment, and we expect to create the stable situation in the investment and currency markets.”
Iran believes that the riyal damaged by two factors cause frustration is the first drop of oil, which is the backbone of the economy of Iran and the second is the continuation of sanctions that restrict Iran’s business dealings until next June.
According to the official Iranian agency “ISNA” this is the sharp drop of the coin is the largest since the arrival of the president to the spiritual power.
Syed Kamal Syed Ali, Vice President of the Central Bank of Iran, local news sites said that “business and the economy were waiting for a comprehensive agreement for Iran with the West over its nuclear program, but not for the reason for the disruption in the Iranian market,” where he preferred to buy the dollar for fear of another collapse of the price riyal exchange.
He said economic analyst Mohammad Ali Yousefi that the weakness of domestic production, and the need for more imports, and international sanctions of the reasons for the continuing decline of the riyal exchange. Economists say the government deliberately raise the price of the dollar, because they pay their employees’ salaries Riyals, while the price of a barrel of oil, which represents the most important source of income Iran, dropped 40 percent last month.
It is noteworthy that the Government of spiritual lifted the dollar exchange rate at the central bank from 25,000 to 26,500 rials, because of the low price of oil to $ 70 a barrel in order to cover the budget deficit in the coming year.
Iranian Economy Minister Ali Tayyip Nia warns Iranians rush to sell riyal
These developments come after a wave of demand from the Iranians to convert the Iranian rial into foreign currencies weekend.
It also coincides with fears of an economic crisis because of an expected decline in oil prices and the prospect of continuing imposed economic sanctions on Iran for several months to come.
The Tehran negotiations with world powers had failed last week to reach a final agreement. It was instead to extend the interim agreement and the continuation of negotiations for a period of 7 months, until the end of June.
Analysts say the follow-up to what is happening to the Iranian currency can summarizes the impact of sanctions on Iran size, after the Iranian rial has lost more than 70 percent of its value since the imposition of the sanctions.
The impact of sanctions is not limited according to observers on commercial transactions only, but extends to commodity prices and levels of inflation and interest rates, levels of savings and investment and the movement of capital.
Followers believe that the low exchange rate of the Iranian rial, is the biggest concern before the Intergovernmental Panel for President Hassan Rohani
Iran’s economy suffers from recession levels and fought a great inflation added to the record unemployment rates and a decrease in foreign currency reserves due to lack of production and export of oil and drop the current market prices.
Analysts believe that the Iranian rial crisis will enter the country in trouble and unprecedented challenges, and it will be a decisive factor in determining policy in Tehran’s nuclear program.