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Dollar Soars to Near Record Level in Iran

IRAN -- An Iranian man checks the currency rate as he walks past a currency exchange service in Tehran, Iran, 22 June 2020.

The dollar was sold at an almost-record level of more than 250,000 rials in Tehran's exchange market on Tuesday.

Some currency price information channels, which publish the Tehran market's daily exchange rates, even set the dollar's price at 25,250 rials during Tuesday's spike.

Earlier on July 19, the price of the dollar hit a new record, increasing to 260,000 rials.

Following a series of severe currency fluctuations in late July and early August, the Central Bank of Iran (CBI) injected about one billion dollars into the market. The dollar price returned to the level of 210,000 rials, but soon resumed its upward trend.

Iran frequently injects hard currencies into the market, hoping to contain their unbridled soaring.

Estimates from the International Monetary Fund (IMF) show that Iran's foreign currencies reserves at home and abroad will decrease up to $19 billion, ending with $85 billion this year with a $16 billion decrease to come over the next year, eventually falling to $69 billion in 2021.

In previous years, Iran has also tried to artificially prevent the fall of the rial's value by injecting currency into the market. However, in those years, the country's foreign trade balance was always in favor of Iran, and the government had enough hard currency to inject into the market.

The governor of the CBI, Abdol Nasser Hemmati, recently announced that $280 billion in foreign currency had been injected into the market over the past fifteen years, amounting to $18 billion annually.

The Tehran Prosecutor's Office announced last August that 19 people had been arrested for "disrupting" the foreign exchange market. Iranian authorities have also arrested foreign exchange market activists in order to curb foreign exchange prices, which has not been effective.

In a report on the Tehran exchange market on September 8, the Eqtesad (Economy) website disclosed that the government's efforts to reduce market demand had failed, and that Iran is devoid of the "maneuvering power to control market volatility."

The rise in the exchange rate follows a CBI announcement that the informal markets' trading volume was "meager" and "between five and eight million dollars."

Nevertheless, yesterday's developments in Tehran's foreign exchange market show that the CBI's explanations have not met applicants' expectations and foreign exchange trading activists.