Iran’s currency has sunk farther after an exchange of threats between regime officials and Donald Trump.
The rial reached a new historic low on Monday, at 95,000:1 v. the US dollar. The currency has now lost more than half its value since January, despite Government efforts to prop it up amid expanding American sanctions and ongoing issues of mismanagement and low productivity.
The currency has fallen throughout the year, shattering the low of about 45,000:1 set in 2011-2012. Its decline was accelerated by Trump’s May 8 announcement of US withdrawal from the 2015 nuclear deal, accompanied by an order for stricter US sanctions.
The Government has tried to check the slide by announcing a unified official rate of 42,000:1 and switching to the euro as the reporting currency. It has raised interest rates for savers and provided foreign currency at a special rate for importers of essential goods, and authorities have threatened detention of unofficial currency traders.
After the rial reached 90,000:1 last month, the measures provided a brief recovery. However, the rial has dropped dropped about 20% in the past week.
Over the weekend, both the Supreme Leader and President Hassan Rouhani warned that Iran would curb the oil exports of other countries if Iranian sales were affected further by US sanctions. The statement raised the prospect of Tehran trying to block the Strait of Hormuz, a vital route through the Persian Gulf for oil tankers.
After Rouhani spoke of the “mother of all wars” and directly challenged Donald Trump “not to play with the lion’s tail”, the US President responded on Sunday with an all-caps tweet: “NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE.”
Regime Ponders Response to Trump
Iranian officials moved cautiously on Monday as the regime considered its reply to Trump’s Twitter threat.
Head of judiciary Sadeq Larijani warned that “any illogical move by the United States would entail a memorable response”, but Deputy Foreign Minister Abbas Araqchi stepped back from the closure of the Strait of Hormuz, saying he hoped the situation would not escalate to a level forcing Iran to halt the oil exports of other countries in the region.
Most Iranian media did not report on Trump’s tweet. Tasnim carried the response of the head of the Basij paramilitary, Brig. Gen. Gholamhossein Gheibparvar, that Trump “cannot do a damn thing against Iran”, but it put the story below several others.
Foreign Ministry spokesman Bahram Qassemi ignored Trump’s tweet in his weekly press conference. He concentrated instead on a Sunday speech by Secretary of State Mike Pompeo which attempted to whip up support for regime change.
Qassemi said the address, criticizing “hypocritical holy men” as corrupt, was “vulgar, baseless, and deceitful”.
In a tweet late Monday, Foreign Minister Mohammad Javad Zarif played back Trump’s “BE CAUTIOUS” warning:
COLOR US UNIMPRESSED: The world heard even harsher bluster a few months ago. And Iranians have heard them —albeit more civilized ones—for 40 yrs. We’ve been around for millennia & seen fall of empires, incl our own, which lasted more than the life of some countries. BE CAUTIOUS!
— Javad Zarif (@JZarif) July 23, 2018