The Iranian national currency hit a new record low against the US dollar on Monday, taking a historic step back as the US impose new US sanctions next week
pledged new measures to restore calm. It was not said what these measures were, but they are likely to be the first big steps for the new governor of the central bank, Abdolnaser Hemmati. The rial was traded on Monday at $ 119,000, according to Bonbast, reflecting unofficial currency market prices. The currency dropped over $ 100,000 a dollar for the first time on Sunday and has nearly halved since early May.
The collapse of the currency and an increase in demand for gold are "not proportional to economic realities," said the central bank.
New US sanctions will come into effect on August 6 and affect Iran's trade in gold and other precious metals, the purchase of dollars, metals, software and the automotive sector, exacerbating uncertainty and a flight to investor safety , Further sanctions for the Iranian oil and shipping industry are planned for November
The sanctions follow the resignation of President Trump of Iran on 8 May. This deal, agreed in 201
Iran has already taken a number of measures to stem the currency crisis. In April, the Iranian authorities announced that the riyal would be traded at $ 42,000, making it illegal for anyone to act outside the official course. In July, Iran opened a secondary foreign exchange market for importers of non-essential goods that are not benefiting from the central bank's preferred interest rate, which is currently around Rs. 44,000 against the dollar. However, the secondary market has not strengthened the currency.
Meanwhile, the large gap between official and market interest rates has created an incentive for fraud and made people who are closely linked to the regime benefit from the situation.
Authorities have arrested dozens of people in recent days for whom an Iranian justice spokesman called "economic disruptions" on Monday. Some were accused of buying Iranian identity cards and using them in counterfeit trading transactions that allowed them to receive dollars from the central bank at preferential rates.
The crisis is coming at a difficult time for the Iranian leaders. While the weakened currency is often attributed to corruption and speculation, Iran is grappling with rapidly rising prices for meat, medicines, and other staple foods that have greater impact on ordinary Iranians.
The biggest protests for nearly a decade broke out in December and January, focused on the economic administration of President Hassan Rouhani. The traders on Tehran's old market, the Grand Bazaar, closed their shops in June as conditions worsened.
Write to Asa Fitch at [email protected]