Iran fights to improve exchange rate for rial

Published on 07/10/2012 00:00

IRAN’S government was locked in a test of wills with currency dealers yesterday as it tried unsuccessfully to impose a stronger rial ­exchange rate, after a plunge by the currency ­earlier in the week triggered street protests.

Iranian news agencies reported the government’s new foreign exchange centre, used by importers, was selling US dollars at a rate of 25,970 rials.

The state-linked news agencies, as well as Iranian currency-tracking website Mesghal, said the rial was trading in the free market at 28,500, much stronger than levels near 37,500 ­early in the week.

Most Iranians obtain hard currency from the free market for business and foreign travel, and to protect their savings against inflation, which is widely believed to be running at more than 25 per cent.

“Money changers in ­Tehran tell us not even to call them to ask the price of currency. They say they are not giving rates,” a merchant in the capital said.

A message on Mazanex, an Iranian currency-tracking website, read: “Unfortunately we still cannot ­access rates to cite for the domestic market.”

SarafiJalali.com, a Tehran moneychanger website, said: “To comply with the policies of the ­Central Bank of the Islamic Republic of Iran, and to help organise the currency market of Iran, Sarafi Jalali for now will not announce any rates.”

Under pressure from western economic sanctions against Iran, the rial hit a record low of around 37,500 to the US dollar on Tuesday. The slide prompted anti-government demonstrations near Tehran’s Grand Bazaar as police ­arrested money changers accused of speculating against the currency.

Most free market trade of the rial in Tehran and Dubai then ground to a halt because dealers feared being targeted by police for quoting rates that displeased the government.