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 Rubio Looks to Surge in New Hampshire

    Republican presidential candidate has moved into second place in several recent surveys and appears to be gaining ground on longtime frontrunner Donald Trump

    UN Calls for Global Ban on Female Genital Mutilation

    Recent UNICEF report finds at least 200 million girls and women alive today have undergone female genital mutilation in 30 countries

    UN Pilots New Peace Approach in CAR

    Approach launched in northern town of Kaga Bandoro, where former combatants of mainly Muslim Seleka armed group and Christian and animist anti-Balaka movement are being paid to do community work

    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.
    German Artists to Memorialize Refugees With Life Jacket Exhibiti
    X
    Hamada Elsaram
    February 05, 2016 4:30 PM
    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video German Artists to Memorialize Refugees With Life Jacket Exhibit

    Sold in every kind of shop in some Turkish port towns, life jackets have become a symbol of the refugee crisis that brought a million people to Europe in 2015.  On the shores of Lesbos, Greece, German artists collect discarded life jackets as they prepare an art installation they plan to display in Germany.  For VOA, Hamada Elrasam has this report from Lesbos, Greece.
    Video

    Video E-readers Help Ease Africa's Book Shortage

    Millions of people in Africa can't read, and there's a chronic shortage of books. A non-profit organization called Worldreader is trying to help change all that one e-reader at a time. VOA’s Deborah Block tells us about a girls' school in Nairobi, Kenya where Worldreader is making a difference.
    Video

    Video Genius Lets World Share Its Knowledge

    Inspired by crowdsourcing companies like Wikipedia, Genius allows anyone to edit anything on the web, using its web annotation tool
    Video

    Video Former Drug CEO Martin Shkreli Angers US Lawmakers

    A former U.S. pharmaceutical business executive has angered lawmakers by refusing to explain why he raised the price of a life-saving pill by 5,000 percent. Martin Shkreli was removed from a congressional hearing on Thursday after citing his Fifth Amendment right to stay silent. Zlatica Hoke has more.
    Video

    Video Super Bowl TV Commercials are Super Business for Advertisers

    The Super Bowl, the championship clash between the two top teams in American Football, is the most-watched sporting event of the year, and advertisers are lining up and paying big bucks to get their commercials on the air. In fact, the TV commercials during the Super Bowl have become one of the most anticipated and popular features of the event. VOA's Brian Allen has a sneak peek of what you can expect to see when the big game goes to commercial break, and the real entertainment begins.
    Video

    Video In Philippines, Mixed Feelings About Greater US Military Presence

    In the Philippines, some who will be directly affected by a recent Supreme Court decision clearing the way for more United States troop visits are having mixed reactions.  The increased rotations come at a time when the Philippines is trying to build up its military in the face of growing maritime assertiveness from China.  From Bahile, Palawan on the coast of the South China Sea, Simone Orendain has this story.
    Video

    Video Microcephaly's Connection to Zika: Guilty Until Proven Innocent

    The Zika virus rarely causes problems for the people who get it, but it seems to be having a devastating impact on babies whose mothers are infected with Zika. VOA's Carol Pearson has more.
    Video

    Video Solar Innovation Provides Cheap, Clean Energy to Kenya Residents

    In Kenya, a company called M-Kopa Solar is providing clean energy to more than 300,000 homes across East Africa by allowing customers to "pay-as-you-go" via their cell phones. As Lenny Ruvaga reports from Kangemi, customers pay a small deposit for a solar unit and then pay less than a dollar a day to get clean energy to light up their homes or businesses.
    Video

    Video Stunning Artworks Attract Record Crowds, Thanks to Social Media

    A new exhibit at the oldest art museum in America is shattering attendance records. Thousands of visitors are lining up to see nine giant works of art that have gotten a much-deserved shot of viral marketing. The 150-year-old Smithsonian American Art Museum has never had a response quite like this. VOA's Julie Taboh reports.
    Video

    Video Apprenticeships Put Americans on Path Back to Work

    Trying to get more people into the U.S. workforce, the Obama administration last year announced $175 million in grants towards apprenticeship programs. VOA White House correspondent Aru Pande went inside one training center outside of Washington that has gained national recognition for helping put people on the path to employment.
    Video

    Video New Material May Reduce Concussion Effects

    As the 2016 National Football League season reaches its summit at the Super Bowl this coming Sunday (2/7), scientists are trying to learn how to more effectively protect football players from dangerous and damaging concussions. Researchers at Cardiff and Cambridge Universities say their origami-based material may solve the problem. VOA’s George Putic reports.
    Video

    Video Saudi Arabian Women's Sports Chip Away at Stereotypes

    Saudi Arabian female athletes say that sports are on the front line of busting traditions that quash women’s voices, both locally and internationally. In their hometown of Jeddah, a group of basketball players say that by connecting sports to health issues, they are encouraging women and girls to get out of their homes and participate in public life. VOA’s Heather Murdock reports.
    Video

    Video A Year Later, Fortunes Mixed for Syrians Forging New Lives in Berlin

    In April of last year, VOA followed the progress of six young Syrian refugees -- four brothers and their two friends -- as they made their way from Libya to Italy by boat, and eventually to Germany. Reporter Henry Ridgwell caught up with the refugees again in Berlin, as they struggle to forge new lives amid the turmoil of Europe's refugee crisis.
    Video

    Video Zika Virus May be Hard to Stop

    With the Zika virus spreading rapidly, the World Health Organization Monday declared Zika a global health emergency. As Alberto Pimienta reports, for many governments and experts, the worst is yet to come.