IRANIAN RIYAL vs USd - Understanding the Rial's Decline

Iranian Rial to USD Conversion Rate

Tehran - After the rise in the price of the US dollar toppled the former governor of the Iranian Central Bank, Ali Salehabadi, 25 days ago, the local currency (riyal) fell on Sunday to a new record level, as the price of one dollar exceeded 452 thousand riyals in the unofficial market. The Iranian currency has regained a small part of its value this month, as the dollar fell from 440,000 riyals in the first week to 400,000 riyals in the second week due to promises made by the new Central Bank Governor, Mohammad Reza Farzin, regarding enhancing the value of the national currency.
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After the relative stability that the riyal witnessed during the past two weeks, its price became unstable again with news of possible European and American sanctions on Iraqi banks with the aim of restricting the besieged Iranian economy. Historic collapse In addition to the rise in the price of the dollar, the prices of the yellow metal witnessed a noticeable increase in Tehran, where a gram of 18-carat gold reached a new record and exceeded 20 million and 110 thousand riyals, at a time when the price of the euro reached 489 thousand riyals, according to banking offices in the center of the Iranian capital.

The Iranian currency recorded its highest collapse against foreign currencies since the victory of the Khomeini revolution in 1979, when the dollar was equivalent to 70 riyals at that time, but the riyal fell on the eve of the 44th anniversary of the victory of the revolution about 6,400 times against the green currency in the unofficial market. Observers in Iran attribute the reason for the rial's loss of value to the politicization of the economy and its impact on international developments, especially developments in the nuclear issue and tension with the West, which is directly reflected in the increase in foreign sanctions and restrictions on the Iranian economy.

Politicization of the economy In this context, Iranian economist Albert Baghzian reads the fluctuation of the national currency in the context of economic plans affected by politics, explaining that the price of the dollar rose by about 5,000 riyals following the European Parliament’s call to place the Revolutionary Guard on the list of terrorist organizations, while the American currency had It decreased by about 4 thousand riyals following the resignation of the former governor of the Central Bank of Iran, which confirms the close connection between the national economy and the country’s foreign policy.

In a press statement published by Entekhab News Agency, Baghzian searches for the reason for the decline in the value of the riyal in the field of political disputes between Tehran and Washington on the one hand and European capitals on the other hand, and believes that the solution lies in removing the specter of sanctions from the national economy. The Iranian economist urges his country's authorities to take serious action to relieve the besieged economy through the nuclear negotiations aimed at saving the nuclear agreement. Relations between European Union member states and Tehran have deteriorated over the past few months with faltering efforts to revive the nuclear agreement, in addition to Tehran's arrest of a number of European citizens on charges of espionage or incitement to the recent protests against the government.

Government endeavors Meanwhile, Central Bank Governor Mohammad Reza Farzin, on Sunday, tried to reassure Iranians about their national currency, declaring that the country does not face a problem with its hard currency reserves, which recently rose to about $20 billion. In a televised program, Farzin revealed the release of $200 million in Iranian assets in Iraq, stressing that the Central Bank is following up on the release of all frozen assets abroad, and that its negotiations with regional partners have reached good results that will reflect positively on stabilizing the official exchange rate.

For his part, the economic researcher, Moin Sadeqian, described Farzin’s promises as coming in the context of what is known as “speech therapy,” adding that the promises made by the Central Bank governor will have a relative effect in curbing the price of the dollar, but he expects the riyal’s value to continue to decline during the few months. Coming.

The collapse continues Speaking to Al Jazeera Net, Sadeghian proposes raising the interest rate and reducing the budget deficit, in addition to reducing tension with external powers to prevent the price of the dollar from rising and reaching new heights in the Iranian market, stressing that the rampant inflation pushes the citizen to acquire hard currency to preserve the value of his money, which raises the demand for... The dollar compared to the limited supply. He expected that the Iranian government would pump hard currency into the free market to limit the continued collapse of the national currency, describing the effect of this policy as temporary, just like the arrest of dollar brokers on charges of disrupting the national economy.

​The researcher concluded that his country's attempts to trade in national currencies with other countries will not be able to limit the decline in the value of the national currency, explaining that in light of the stability of the value of other currencies against the dollar, their prices in the Iranian market will rise with the decline in the value of the riyal. Following the relative stability that the riyal witnessed following the signing of the nuclear agreement in 2015, turmoil returned to the Iranian currency following the American withdrawal in 2018 from the agreement, and since that time the price of the American currency has witnessed spikes against the riyal as the chances of reviving the nuclear agreement declined.

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