News / Middle East

Plunging Currency Adds to Iran's Woes

Handout photo showing the front of the new Iranian 100,000 Rials bank note (2010 file photo).
Handout photo showing the front of the new Iranian 100,000 Rials bank note (2010 file photo).
The long, steady decline of the Iranian rial took a precipitous turn Monday, with the currency falling more than 17 percent in trading. At one of the lowest points, it took 35,000 rials to buy one U.S. dollar. Less than a year ago, it took only 13,000 rials. 

The drop was so steep that popular Iranian currency data websites were no longer providing information about the dollar exchange rate. On Mazanex.com, the dollar rate for the rial was blanked out, and Mesghal.ir was replaced with a message reading, “Account Suspended.”

Alex Vatanka, a scholar at the Washington-based Middle East Institute, said the rial’s fall was due to a combination of economic sanctions imposed by Western countries and internal attempts at economic reform.

“It has resulted in an interesting and painful cocktail that Iranians are seeing when they go out and buy groceries,” he said.

The sanctions have severely restricted Iran’s ability to sell oil on the world market and limited its access to the international banking system. They also have led to inflation, which hovers at around 25 percent.

Ali Ansari, a professor of Iranian History at the University of St. Andrews in Scotland, said the decline in the rial “reflects the public’s growing lack of confidence in the government and its ability to manage the crisis that is developing.”

“The short term result will be further inflation and a further fall as people move to acquire hard currency and move money abroad,” he said.

The worsening economic conditions in Iran led Israeli Finance Minister Yuval Steinitz to say Sunday that Iran's economy was "on the verge of collapse," but such talk may be premature, according to Ansari.

“Unrest will come, but it is too early yet,” he said.

Vatanka agreed, saying he wouldn’t go so far as to suggest an economic collapse.

“It’s a powerful state, and the supreme leader has the loyalty of the top brass. He [Ayatollah Ali Khamenei] may have a pesky president, but when [President Mahmoud Ahmadinejad has] gone too far, he’s been pulled back in.”

To try to stabilize the rial, the Iranian government opened a currency exchange center last month under the supervision of the central bank. It was designed to provide discounted dollars to importers of some essential goods.

A lack of dollars from oil revenue means the demand for dollars is higher than the supply. The plunge in the rial may indicate that because of falling oil revenue, the exchange does not have enough dollars to meet demand.

"This [exchange] center has helped accelerate the soaring dollar rate," Iranian economics columnist Hirad Hatami told AFP.

But he stressed there is also the issue of speculation.

“This is a bubble which is rooted in the operation of the exchange center,” he said.

For ordinary Iranians, the fall of the rial is unsettling.

In an online interview, a young Iranian said it was causing his business to lose money. He said he’d recently ordered 30,000 Euros worth of imports from Europe at a rate of 28,000 rials to the Euro.

“As of today, [the] Euro hiked up to 45,000 rials, so by the time my package arrives, it will be impossible for me to sell the material without losing money,” he said in an interview with VOA conducted online. “Right now if I return everything, even pay a 30 percent fee for their loss and get my Euros back, I would lose less money! Basically, if I had been sitting on my cash these two months and done nothing, I would have made a lot of profit."

The currency’s fall is also wreaking havoc on every day lives, with prices skyrocketing on essentials.

"Today I went to the hospital to buy a special post-cancer medicine that my mother always uses," said an Iranian citizen in an online interview. "The price had tripled since two weeks ago."

For other Iranians, even purchasing simple items like home appliances has become nearly impossible.

"We went to all the Samsung store on Shariati Avenue last week, trying to buy a fridge. Samsung would not sell any and told us that everything is sold out, including the ones we saw right there at the stores,” said another Iranian online. “They wouldn't give us price quotes either. Everyone's life is now dependent on the value of dollar ... it's what everybody is talking about, even in smaller cities ... nobody thinks about anything else these days."

While it has been common practice for Iranians to keep their savings in dollars, with the current plunge, they're converting their every day spending money to dollars as quickly as they can.

"People try to keep dollars instead of rials," said a young engineer in an online interview."I've seen my friends buy $1,000 at a time and then convert it little by little into rials and spend it day to day."

You May Like

Video British Fighters on Frontline of Islamic State Information War

It’s estimated that several hundred British citizens are fighting for Islamic State alongside other foreign jihadists More

Pakistan's Political Turmoil Again Shines Spotlight on Military

Thousands of protesters calling for PM Sharif to step down continue protests in front of parliament, as critics fear political impasse could spur another military coup More

Photogallery Ebola Quarantines Spark Anxiety in Liberian Capital

Food prices rise sharply as residents attempting purchases clash with security forces, leaving one person dead More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Native Bees May Help Save Cropsi
X
Deborah Block
August 22, 2014 12:23 AM
U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video Native Bees May Help Save Crops

U.S. President Barack Obama has called for a federal strategy to promote the health of bees that have been declining. The honeybee has been waning due to parasites, disease and pesticides. Wild bees may be used to take over their role as crop pollinators. Scientists first need to learn a lot more about wild bees, says biologist Sam Droege, who is pioneering the first national inventory on native bees. VOA’s Deborah Block went to his research laboratory in Beltsville, Maryland, to bring you more.
Video

Video US Defense Officials Plan for Long-Term Strategy to Contain Islamic State

U.S. defense officials say American air strikes in Iraq have helped deter Islamic State militants for the time being, but that a broad international effort is needed to defeat the extremists permanently. Defense Secretary Chuck Hagel warned Thursday that the group formerly known as the Islamic State in Iraq and the Levant, or ISIL, is better organized, and financially and militarily stronger than any other known terrorist group. Zlatica Hoke has more.
Video

Video Drug-Resistant Malaria Spreads in Southeast Asia

On Thailand’s border with Myanmar, also known as Burma, a malaria research and treatment clinic is stepping up efforts to eliminate a drug-resistant form of the parasite - before it spreads abroad. Steve Sandford reports from Mae Sot, Thailand.
Video

Video Gaza Conflict, Hamas Popularity Challenge Abbas

The Palestinian unity government of Mahmoud Abbas has failed to convince Hamas to agree to Egyptian-negotiated terms with Israel on a Gaza cease-fire. VOA State Department Correspondent Scott Stearns reports on what the Gaza conflict means for President Abbas, with whom U.S. officials have worked for years on a two-state solution to the Israeli-Palestinian conflict.
Video

Video Nigeria's 'Nollywood' Movie Industry Rolls in High Gear

Twenty years after its birth in a video shop in Lagos, Nigeria's "Nollywood" is one of the most prolific film industries on earth. Despite low budgets and whirlwind production schedules, Nigerian films are wildly popular in Africa and industry professionals say they hope, in the future, their films will be as great in quality as they are in quantity. Heather Murdock has more for VOA from Lagos.
Video

Video UN Launches 'Biggest Aid Operation in 30 Years' in Iraq

The United Nations has launched what it describes as one of the biggest aid operations in 30 years in northern Iraq, as hundreds of thousands of refugees flee the extremist Sunni militant group calling itself the Islamic State. As Kurdish and Iraqi forces battle the Sunni insurgents, the fighting has forced more people to flee their homes. Kurdish authorities say the international community must act now to avert a humanitarian catastrophe. Henry Ridgwell reports for VOA from London.
Video

Video Cambodian American Hip Hop Artist Sings of Personal Struggles

A growing underground movement of Cambodian American hip hop artists is rapping about the struggles of living in urban America. Most, if not all of them, are refugees or children of refugees who came to the United States from Cambodia to escape the Khmer Rouge genocide of the 1970s. Through their music, the artists hope to give voice to immigrants who have been struggling quietly for years. Elizabeth Lee reports from Long Beach, California.
Video

Video African Media Tries to Educate Public About Ebola

While the Ebola epidemic continues to claim lives in West Africa, information technology specialists, together with radio and TV reporters, are battling misinformation and prejudice about the disease - using social media to educate the public about the deadly virus. VOA’s George Putic has more.

AppleAndroid