Iran warns currency speculators as rial continues to fall
Faced with a plummeting currency in the wake of toughened international sanctions, Iran is cracking down on black-market money changers and warning that major speculators could face execution.Updated: Feb 03, 2012 00:18 IST
Faced with a plummeting currency in the wake of toughened international sanctions, Iran is cracking down on black-market money changers and warning that major speculators could face execution.
The crackdown comes as Iranian authorities are struggling to stabilise the rial, which has nosedived amid announcements of new US and Euro­pean sanctions against Iran’s central bank and oil exports.
As a warning to speculators, several money changers working on the streets of central Tehran have been arrested by undercover police officers pretending to desperately seek foreign currency.
In addition, the chief of Iran’s judiciary, Ayatollah Sadegh Amoli Larijani, threatened Wednesday to seek the death penalty for major speculators. Speaking about the unrest in the foreign-exchange markets, he warned that “dep­ending on the importance of their crimes, some of the economic corrupted can face execution,” the semiofficial Mehr News Agency quoted him as saying in a meeting with judicial officials on the currency crisis.
The government has also announced that special branches of state banks will be set up at Iran’s international airports, where travelers leaving the country will be able to purchase up to $1,000 in foreign currency — after passing through passport and customs controls — and take it with them abroad.
The rial was already losing ground to the dollar and the euro during months of increasing threats of war and further sanctions against the country, analysts said. But after Presi­dent Obama signed off on new measures against Iran’s central bank on Dec. 31, the currency fell to unprecedented lows. Since then, it has lost nearly half its value on the black market.
The market rate for the dollar now stands at about 18,800 rials, compared with an official exchange rate of about 11,500 rials to the dollar. In December, the market rate was about 12,500 rials to the dollar. Even at the official rate, the rial’s value has fallen sharply since December 1, when it theoretically took only about 7,400 rials to buy a dollar.
A EU ban on Iranian oil — announced on Jan. 23 and due to take effect in six months — has further worried Iranian consumers and importers.
Products such as imported steel, iPhones and wheat have doubled in price, with traders changing price tags by the hour to keep up with the rial’s plunging value. The drop has prom­pted housewives, businessmen and pensioners to buy up even more foreign currency and gold, as few expect the situation to normalise anytime soon.
“I have spent the whole day trying to buy dollars,” one steel trader said this week.
“How do we travel, order new shipments? I have no idea,” the trader said, asking to remain anonymous because he sold steel to government-related companies.
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First Published: Feb 03, 2012 00:15 IST