A new directive issued by the Central Bank of Iran (CBI) has set strict limits on the amount of foreign cash travelers can take with them out of the country amid a deepening currency crisis.
According to the new directive published on CBI’s website May 13, travelers leaving Iran by air are only allowed to carry 5000 euros ($5,980) or its equivalent in other foreign currencies.
This is half the amount of foreign currency travelers could take with them before the new directive was issued.
“Passengers leaving the country through land, rail, or sea routes are only allowed to take out up to 2,000 euros ($2,392) each. And travelers are obliged to declare their cash exceeding this amount at customs,” the directive read.
Based on the new rules, hard currency over 5,000 euros must be declared to customs, but it will be deposited with the banking system and interest will be paid on the deposit until the travelers are allowed to withdraw it later.
“All the rules regarding the hard currency cap will also be applicable to bank instruments and securities,” the CBI noted.
The Iranian rial plunged to a record low against the U.S. dollar May 9, a day after U.S. President Donald Trump announced the U.S. withdraw from the Joint Comprehensive Plan of Action (JCPOA), Iran’s nuclear deal with world powers.
The dollar was being offered for as much as 75,000 rials, compared to around 65,000 just before Trump announced his decision, according to foreign exchange website Bonbast.com, which tracks the forex market, Reuters reported.
However, the rial’s fall against the dollar started much earlier. In late March the exchange rate started to slide quickly, prompting the government to intervene by establishing a fixed rate of 42,000 rials to the dollar April 10.
This and other protective measures were mostly ignored by exchange offices and the rial’s free fall continued.
The Islamic Republic’s Supreme Leader Ayatollah Ali Khamenei has demanded President Hassan Rouhani do more to regulate the forex market.
Rouhani’s economic affairs team attended a closed-door session of parliament May 13 to explain the government’s new emergency measures aimed at shoring up the national currency.
Vice President Eshaq Jahangiri, Deputy President for Economic Affairs Mohammad Nahavandian, Minister of Economic Affairs and Finance Massoud Karbasian, and the CBI Governor Valiollah Seif also attended the session by video conference.
Seif has taken harsh criticism over the crisis, with some even calling for his resignation. For his part, he insists smuggling and money laundering are to blame for the upheaval in currency markets.
Critics have attributed the devaluation of Iranian currency to factors such as political instability, high inflation, economic mismanagement and poor foreign relations.
Meanwhile, Economist Ahmad Alavi, wrote in a commentary for radio Farad that the atmosphere of tension and threats before the US pullout from the nuclear deal with Iran dramatically increased economic and political risks for those interested in investment in Iran. The development led to still further decline in the value of rial.