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Dollar Rising Again In Iran After Central Bank's Intervention Fizzled Out

U.S. dollar bills being counted at an exchange office in Iran. FILE PHOTO
U.S. dollar bills being counted at an exchange office in Iran. FILE PHOTO

The U.S. dollar has started rising again since Saturday in Iran after a central bank intervention last week briefly strengthened the Iranian currency.

The Central Bank of Iran (CBI) injected about $1 billion into the local exchange market from July 18 to 23. The dollar which had risen to 260,000 rials dropped to 210,000 last week.

However, from the beginning of the new week in Iran (Saturday), the price of the dollar started to rise again, reaching 235,300 rials at the end of Wednesday, July 29.

At the beginning of the new Iranian year (March 20, 2020), the price of the dollar was 160,000 but soared to 180,000 rials in June and kept going up.

Following a rapid rise in the exchange rate and a barrage of criticism., the CBI injected a total of one billion dollars into the local market from Saturday to Wednesday last week.

The CBI Governor, Abdol Nasser Hemmati recently announced that $280 billion in foreign exchange had been injected into the market over the past fifteen years.

During this period, the Islamic Republic's foreign trade balance was always positive and the government could artificially prevent the devaluation of the rial by injecting foreign hard currencies into the local market.

But with loss of most of its oil exports due to U.S. sanctions Iran is now spending more hard currencies than it earns is not able to keep the rial artificially high.

The International Monetary Fund (IMF) forecast shows that Iran's total oil and non-oil exports will be about $ 46 billion and that the country's imports $ 64 billion.

Since March, Iran’s rial fell by nearly seventy percent and reached 260,000 against the dollar. Three years ago, before the United States pulled out of the 2015 nuclear deal and reimposed sanctions, Iran’s rial traded at 32,000 to the dollar.