Iran’s currency is falling again, after a brief halt to its historic slide amid the Islamic Republic’s growing economic problems.
The rial dropped to 106,000:1 v. the US dollar at the close of business for the Iranian weekend, more than 12% down from its Tuesday level of 93,500:1.
The currency — already at a historic low of 45,000:1 in January — has lost almost 60% of its value this year. It sank to 119,000:1 in late July before the Government announcement of a reorganized foreign exchange market and promised changes to the banking and financial sectors brought a short-lived recovery.
The Government has abandoned the unified official rate of 42,000:1 v. the dollar, allowing the discounted level only for importers, exporters, and travellers. At the same time, it pledged intervention to manage the open-market rate. Hoping to prop up the rial, it lifted restrictions of foreign currencies being brought into Iran and encouraged Iranians to put the money into State banks. Authorities have also been detaining officials, including the former deputy head of the Central Bank, and unofficial currency traders.
However, the measures appear insufficient to provide enough foreign currency to meet demand. The rate for gold coin is also rising, with one coin now at at 34,500,000 rials (about $705).
The Iranian economy has been battered by long-standing internal problems and mismanagement over finance, production, investment, and environmental damage. The difficulties have been compounded by the expansion of US sanctions after the American withdrawal in May from the 2015 nuclear deal.
In an interview on State TV on Monday, President Hassan Rouhani denounced the US “psychological war” while insisting, “People can be sure that the government has put all its effort alongside the other branches to manage the economy.”
However, hardline pressure on Rouhani is taking an increasing toll. This week MPs dismissed the Labor Minister, and the Assembly of Experts demanded further changes in the Cabinet.
Rouhani is resisting the demand of some MPs that he appear before the Majlis to answer questions about the economic sitaution.