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Foreign Exchange

Iran FX rate seen unlikely to reverse course without revival of deal with US

As Iran’s currency crisis deepens, observers fear that far from improving the situation, state intervention will do further damage to a country that was in economic turmoil even before coronavirus.

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Iran's official exchange rate as of July 17 was just over 42,000 rials to the dollar. This rate, however, is subsidised by the Iranian government and reserved for humanitarian imports.

Imports of other essential products use the Integrated Forex Deals System, locally known as Nima, which gives a rate of around 154,000 rials.

The parallel or open-market rate is applied to all other exports and used by local currency traders. According to Bonbast, a website that has tracked unofficial currency market rates in Iran since 2012, dollars were selling for around 241,500 rials on July 17.

Fereydoun Khavand, a French-Iranian economist based in Paris, blames the Central Bank of Iran (CBI) for failing to preserve the value of the national currency, by printing money since the mid 2000s.

CBI governor Abdolnaser Hemmati recently stated that the bank had injected $288 billion into the foreign-exchange market over the last 15 years to control the rate of exchange. Yet despite the apparent failure of this strategy, Iran’s president, Hassan Rouhani, has instructed the central bank to continue the intervention.

Dollar problem

Most of this US currency has come from oil sales and non-oil exports to neighbouring countries such as Iraq, UAE and Turkey.


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