Tehran, 23 January 2023 (GNP): In the midst of rising tensions with the West and the turmoil roiling the nation, the value of Iran’s currency has fallen to an all-time record low.
The US dollar crossed the 45,000-rial threshold on the open market for the first time on Sunday.
Ali Salehabadi, a former governor of the Central Bank of Iran, was dismissed following a previous sharp devaluation of the rial in late December when it plunged to more than 44,000 versus the dollar on the open market.
In an effort to maintain price stability amid a 40% inflation rate, his successor, Mohammad Reza Farzin, had sworn to artificially maintain the currency’s rate against the dollar at 28,500 rials.
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The main causes of currency volatility, according to Farzin, are media hype and psychological ploys in society.
The central bank asserted that 300 million euros ($326 million) of Iran’s money in Iraq had been received, despite US sanctions, and put into the market as the rial plunged once further on Saturday.
In an apparent effort to demonstrate that there is no scarcity of money, the central bank said on Sunday that the annual cap on the amount of currency that can be sold to one person will soon increase from 2,000 euros ($2,176) to 5,000 euros ($5,439).
The cap was put in place after the US unilaterally walked away from the 2015 Iran nuclear deal with other international powers and reinstated harsh sanctions in 2018. This led to a new financial crisis in Iran.
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Iran’s security force has frequently reported the arrest of hundreds of currency speculators in recent months in an effort to stop currency depreciation.
The rial’s depreciation this week coincides with rising tensions with the West and the continuation of protests in Iran that began in September of last year and which Tehran accuses the West of instigating.
A resolution calling for the designation of the Islamic Revolutionary Guard Corps (IRGC) as a terrorist organisation and for sanctions on the Supreme Leader Ayatollah Ali Khamenei, President Ebrahim Raisi, and others was unanimously approved by the European Parliament earlier this week.