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October 21, 2019

Iran imposed fixed exchange rate on its currency to the dollar

rial to USDIran decided to impose a fixed exchange rate on its currency to the dollar and has banned unregulated trade after it reached a record low level. In addition, the Iranian central bank has introduced a limit of 10,000 EUR for funds owned by citizens outside banks. The citizens a few days (by the end of the month) to sell or deposit in the banks the funds above that amount. If this does not happen, a court lawsuit will be raised against them.

For six months, the Iranian rial has lost 30% of its value amid worries about the country’s economy related to the US ability to withdraw from Iran’s international nuclear program.

The text, signed in 2015 between Iran and the 5+1 Group (China, USA, France, Britain, Russia and Germany), aims to prevent Iran from acquiring an nuclear weapons. The US President Donald Trump threatened in January to withdraw his country from the deal on May 12, when his latest ultimatum to the European Union to harden the text expires.

Iran’s first vice president, Eshaq Jahangiri, said the official price of one dollar would be 42,000 Iranian rials. He pointed out that trading at another price was banned and would be considered as illegal.

The decision was made late last night after two days the foreign currency appreciated so much that the rally was traded at a rate of 62,000 rials per dollar or 18% cheaper than Saturday exchange rate.

The government spokesman Mohammad Bagher Nobakht said today that Iran receives from export 95 billion USD per year, mainly from oil exports resumed after the nuclear agreement was reached. At the same time, 80 billion USD are spent on imports.

Iranian central bank governor talked to parliament to clarify the measure. He was met with fierce objections and interruptions by a group of MPs who insisted on his resignation.

Iran has long had trouble managing its currency. In 2012, the government tried to introduce an official single currency exchange, but his attempt failed.

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