Iran dismisses sanction impact on currency

Latest blow to the country's economy

AP — Iran said Tuesday that the steep depreciation in the country's currency against the U.S. dollar was not linked to U.S. new sanctions targeting its Central Bank, while officials geared up for a meeting to assess possible measures to shore up the riyal in an already ailing economy. Since President Barack Obama on Saturday signed into law a bill that takes aim at Iran's Central Bank, the riyal hit a new record low on Monday, dropping by around 13 percent against the dollar in just two days and reaching 18,000 riyals to the dollar. The official rate, which few but the government pay attention to, is 11,180 riyals to the dollar. The currency rebounded Tuesday to about 17,000 riyals to the dollar The pressure on the riyal has become the latest economic blow to the country's economy >>>


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Esfand Aashena

Hirre the Iranian economy is nearly ALL domestic.

by Esfand Aashena on

There has always been a discussion that part of the reason Iran's economy was not directly affected by the worldwide economic downturn (US and Europe as the biggest ones) is due to Iran's nearly all domestic economic policies.

Islamic Republic has a "protectionist" economic policy.  Something that many US presidential candidates often say but can never deliver.  For example, US can't depend on US manufacturing alone and ignore the cheaper international ways of making goods and services.  Another words you can't live in a cacoon of an economy in today's world.   Chinese goods are flooding the markets in all 4 corners of the world, including Iran.

So in Iran, people are afraid to buy anything and the high inflation is adding salt to the wound.  Those who have money are investing it in gold and Dollar because their Rial isn't worth anything.  As Republicans would say "job creators" are buying Dollars for themselves and not "creating" any jobs! 

So the domestic economy is severely depressed and it is no longer economically feasible to make anything be it in agriculture or the refrigerator/water heater industries.  The remaining retail businesses (nearly everyone in Iran has at least tried his/her hands at a small retail business once, if not multiple times) don't have enough customers to stay alive so they fold too.  Official unemployment is at 30%.

That leaves the big shots of Islamic Republic who sell oil and get paid in Dollar.  When they get the Dollars do they spend it right away and buy foreign goods with their Dollars?  No they have to bring it home and spend it in Rial.  But those Dollars are purchased at 1800 Toman right away!  So where would the big shots get their Dollars back?!

Back in 2010 the ever "smart" and special Ahmadinejad's economic team was talking about getting paid in Euro and then in Rials!  Yes Rials!  I wrote a blog about it at the time.  Now imagine if we were getting paid in Rial!  Soon we'd have to PAY customers to buy the oil from us!

So you see this is like digging a hole.  When the Rial collapses like this, Islamic Republic can neither spend it nor save it.  All they do is exasperate the domestic economy, increase the inflation, increase the unemployment and reduce their spending limit overseas.  AND when and if they try to get loans from World Bank (what they used to want to do) they have no credit to speak of.

I am not sure which "loans in Rials" are you talking about.  There is no such loans for the big shots in the Islamic Republic, only regular people loans in Rials which is now asking for higher interests due to the reasons discussed above. 

Everything is sacred

G. Rahmanian

Remember Russian Ruble!

by G. Rahmanian on

This time add Ahmadinejad's Russian Roulette! Even Emam Zaman cannot come to his rescue and save him fom the consequences of his economic stupidities! There is no way Americans are going to use him as an economic advisor to their next president as he was promised during his last visit to New York with his clan of loafers!



by religionoutofgovernment on

When the trust in a currency is gone, the velocity of money picks up, panic sets in and it becomes impossible to stop the flight away from a currency. The end result is hyperinflation, Zimbabwe style!


US Dollar has climbed to 1800 iranian toomans.

by Roozbeh_Gilani on

Farsi Link here. 

Despite Regime's denials, it is widely acknowledeged (even by regime insiders) that this crash of Iran's Currency was kicked off a couple of weeks ago as the result of UAE refusal to "Trade" with Iran. This action of UAE was directly as the result of US pressure. 

Of course the amazing mismanagement of the economy by Ahmadinazhad, and endemic corruption and theft of Iran's oil revenue by the very highest level of islamic regime leadership (Ahmadinezhad/Khamenei and their extended clan) has done it's share of bringing Iran's economy to the virtual state of standstill.

"Personal business must yield to collective interest."


Islamic Rip-off-Lick!

by Faramarz on

Even the ordinary Iranians are getting ripped off by the Regime policies.


some argue that since the IR

by hirre on

some argue that since the IR sell oil and get dollar it return it's good for them if the rial's value is dropped, because the IR's loans in rial will be reduced and at the same time since their dollars are more worth they can buy domestic resources cheaper... I believe the IR are trying to benifit from a self-created situation aswell, but the total effect is negative on IR's economy, which makes sanctions an effective tool...


France wants the world laugh even more

by choghok on

That is why they have said that they want to see that Europe follows USA and put sanctions on the IRI central bank.

Esfand Aashena

The drop in Rial is linked to Ahmadinejad, not Sanctions!

by Esfand Aashena on

Everybody knows why the Rial is sinking and that is strictly due to new sanctions aimed at the Central Bank and yet these so called "Iranian Officials" are defying all logic and spewing nonsense!  This is the trend, everything that is against the Islamic Republic simply doesn't exist!

The decline in the currency's value "is not related to the sanctions," Foreign Ministry spokesman Ramin Mehmanparast, arguing that the sanctions had yet to take effect. "For the time being, it has nothing to do with foreign policy."

LOL!  LOL!  loool!  With the sanctions not taking effect, the Rial has sunken like crazy!  So when the sanctions take effect, the Rial will be six feet under!  And then, and only then it will have to do with "foreign policy"! At the moment they are trying to find out if it is the "domestic policy"! 

Everything is sacred