Iran’s currency has fallen to a new historic low, with the rial unofficially passing the 50,000:1 mark vs. the US dollar.

The rial has lost about a quarter of its value since last autumn, amid US sanctions and difficulties in the Iranian economy over production, unemployment, mismanagement, and failing banks.

Last month, the currency sank to about 47,500:1 vs. the dollar. Authorities tried to stem the fall by arresting “unofficial” traders and freezing the accounts of speculators. the Central Bank raised interest rates to encouraging people to hold the rial.

But as soon as trading reopened last weekend after a break for Iranian New Year, the slide was renewed — defying the Supreme Leader’s proclamation that Iran would be triumphant in his “Year of Domestic Production”. Demand for foreign money was marked by long queues at currency exchanges.

Analyst Mohammad Ali Shabani criticized the Central Bank of Iran:

Others pointed to uncertainty over the July 2015 nuclear deal, with the US threatening withdrawal or even tougher sanctions, or general worries among the Iranian public.

“The issue is psychological rather than economic. There’s no reason to buy dollars except in the hope that you can sell them later at a higher rate,” said Esfandiar Batmanghelidj, founder of the Europe-Iran Forum.

Navid Kalhor, a Tehran-based financial analyst, echoed, “I see many people looking to invest in neighboring countries because this fear is spreading about the future of the JCPOA [Joint Comprehensive Plan of Action].”

Kalhor also local banks are running out of available funds: “I have friends who go to banks and ask for 15 or 20 million rials [$300 to $400] and they’re told to come back in a week because they’re out of cash,” said Kalhor.

Trouble for The “Resistance Economy”

Ayatollah Khamenei tried to renew confidence last week in two New Year speeches, calling on Iranians to boost production and buy domestic goods for his “Resistance Economy”.

However, implementation immediately proved difficult. The Government upheld Khamenei’s rhetoric and order public agencies to purchase from domestic suppliers, unless there was no equivalent for foreign items. However, it balked at a general rise in tariffs or import restrictions, with possible effects such as inflation and damage to links with trading partners.

See Iran Daily, March 26: Government Bans Imports by Agencies
Iran Daily, March 25: Government Holds Out Against Import Law for Supreme Leader’s “Year of Domestic Production”

The heads of the three Government branches — President Hassan Rouhani, Speaker of Parliament Ali Larijani, and judiciary head Sadeq Larijani — put up a united front after a meeting on Monday. Rouhani said they agreed on “supporting domestic products”, job creation, and anti-poverty measures.

But, following nationwide protests, analysts noted that many Iranians are preferring to hoard foreign currency amid uncertainty over trade, production, and smuggling and corruption.

“The situation in the economy right now is far from beautiful,” Kalhor said.