Rial Keeps Strengthening After Leader’s Order
TEHRAN (Dispatches) -- The value of Iran’s national currency, the rial, further increased against major currencies on Sunday, and is now trading below the 100,000 rial to the dollar threshold.
The rial jumped to 105,500 against the U.S. dollar Wednesday, from 117,000 at the end of the previous week and 152,500 at the end of October, according to foreign exchange website Bonbast.com.
Iranian media outlets reported Tuesday that the rial had risen beyond 100,000 to the dollar. On Sunday, the Fars news agency quoted the rial in the range of 99,000 to 101,000 to the dollar.
In September, the Iranian currency reached an all-time low of 180,000 rials against the dollar after months of steep declines that saw the currency falling more than five-fold.
The Central Bank of Iran has announced that it is "managing” the currency market and boosting the rial in various ways. Law enforcement has also stepped in arresting dozens of currency traders. Two were executed in November in what was seen as a "message” to other speculators.
The rial gradually began to recover and reached the 100,000 threshold, although that is almost three times lower than what it was worth a year ago.
Large companies which obtain a license to import "essential’ goods, receive a much cheaper preferential rate of around 42,000 rials for each dollar.
Rial weakness earlier this year disrupted Iran’s foreign trade and helped boost annual inflation fourfold to nearly 40% in November.
If the government can support the value of the rial in coming months, it may be able to bring down inflation, improving living standards and reduce capital flight from Iran.
"Because of the stronger rial, initial fears among many about the sanctions have eased somewhat, and fewer people are trying to buy dollars,” a Tehran-based economist told Reuters, declining to be named because of political sensitivities.
Iranian businessmen and economists contacted by Reuters said Iran’s central bank was now supplying large amounts of dollars to the market, not only inside Iran but in foreign locations where the currency is traded, particularly Iraq and Dubai.
Earlier this month, state news agency IRNA quoted central bank governor Abdolnaser Hemmati as saying the bank would do everything in its power to obey an order from Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei to strengthen the rial.
Meanwhile, two men convicted with economic crimes were executed last month, including Vahid Mazloumin, dubbed the "sultan of coins” by local media. He was accused of manipulating the currency market, according to Mizan, the news site of the Iranian judiciary. Thirty men were jailed this month for up to 20 years for economic crimes, the judiciary said.
Iranian economists said the campaign against economic crimes, combined with Ayatollah Khamenei’s order to strengthen the rial, had made many speculators more wary of bidding the currency lower.
In March, the International Monetary Fund estimated Iran was running a current account surplus and had over $100 billion of gross official reserves. Those numbers suggested Tehran might have enough reserves to defend the rial comfortably, Reuters said.
The rial’s rebound is good news for a government that is fighting to prevent U.S. sanctions on Iran’s oil, banking and other industries from pushing the economy deep into recession.
Washington has vowed "maximum pressure” on Iran’s economy to force it to accept tougher limits on its nuclear and missile programs. Iran has ruled this out.
The rial jumped to 105,500 against the U.S. dollar Wednesday, from 117,000 at the end of the previous week and 152,500 at the end of October, according to foreign exchange website Bonbast.com.
Iranian media outlets reported Tuesday that the rial had risen beyond 100,000 to the dollar. On Sunday, the Fars news agency quoted the rial in the range of 99,000 to 101,000 to the dollar.
In September, the Iranian currency reached an all-time low of 180,000 rials against the dollar after months of steep declines that saw the currency falling more than five-fold.
The Central Bank of Iran has announced that it is "managing” the currency market and boosting the rial in various ways. Law enforcement has also stepped in arresting dozens of currency traders. Two were executed in November in what was seen as a "message” to other speculators.
The rial gradually began to recover and reached the 100,000 threshold, although that is almost three times lower than what it was worth a year ago.
Large companies which obtain a license to import "essential’ goods, receive a much cheaper preferential rate of around 42,000 rials for each dollar.
Rial weakness earlier this year disrupted Iran’s foreign trade and helped boost annual inflation fourfold to nearly 40% in November.
If the government can support the value of the rial in coming months, it may be able to bring down inflation, improving living standards and reduce capital flight from Iran.
"Because of the stronger rial, initial fears among many about the sanctions have eased somewhat, and fewer people are trying to buy dollars,” a Tehran-based economist told Reuters, declining to be named because of political sensitivities.
Iranian businessmen and economists contacted by Reuters said Iran’s central bank was now supplying large amounts of dollars to the market, not only inside Iran but in foreign locations where the currency is traded, particularly Iraq and Dubai.
Earlier this month, state news agency IRNA quoted central bank governor Abdolnaser Hemmati as saying the bank would do everything in its power to obey an order from Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei to strengthen the rial.
Meanwhile, two men convicted with economic crimes were executed last month, including Vahid Mazloumin, dubbed the "sultan of coins” by local media. He was accused of manipulating the currency market, according to Mizan, the news site of the Iranian judiciary. Thirty men were jailed this month for up to 20 years for economic crimes, the judiciary said.
Iranian economists said the campaign against economic crimes, combined with Ayatollah Khamenei’s order to strengthen the rial, had made many speculators more wary of bidding the currency lower.
In March, the International Monetary Fund estimated Iran was running a current account surplus and had over $100 billion of gross official reserves. Those numbers suggested Tehran might have enough reserves to defend the rial comfortably, Reuters said.
The rial’s rebound is good news for a government that is fighting to prevent U.S. sanctions on Iran’s oil, banking and other industries from pushing the economy deep into recession.
Washington has vowed "maximum pressure” on Iran’s economy to force it to accept tougher limits on its nuclear and missile programs. Iran has ruled this out.