Parliament gets tough on money traders after currency crash

Iran’s parliament has been forced to crack down on unofficial money traders after new United States sanctions triggered a currency crash and Iranians rushed to buy dollars.

The rial lost about 20 per cent of its value against the dollar before the central bank intervened last week to try to stem further losses by injecting hard currency into the market.

At a special parliamentary debate on the currency crisis yesterday, MPs passed a measure imposing legal penalties on touts who sell foreign currencies outside official exchange offices and banks where rates can be subjected to government controls.

The measure may scare away touts, a common sight in parts of Tehran where they wave wads of currency at passing motorists.

But it will have no immediate impact on the price most Iranians have to pay for dollars which, even at licensed exchange offices, sell at a 40 per cent premium over the central bank’s “reference rate”.

Economists say the currency slide is because of fears about inflation, 20 per cent and rising, eroding the rial’s buying power and the effect of western sanctions making it harder for Iranians to get hold of foreign currencies.

Sanctions approved by President Barack Obama on New Year’s Eve added to demand for dollars, pushing the rial to an all-time low last week.

The new measures would cut off any bank around the world from the US banking system if they do business with Iran’s central bank.

Tehran has denied that the currency problems are related to sanctions which the government says are ineffective and illegal.

ROBIN POMEROY