As Iran’s government struggles to contain a major downward swing in the national currency, the rial, hundreds of millions of contraband dollars and euros have been confiscated from exchange offices, a senior police official announced April 19.
“After the government set a single rate for foreign currencies, 200 police task forces were deployed and more than 160 million and 200 million illegal dollars and euros respectively have been discovered and confiscated, so far,” the country’s Deputy Chief of Police, the Islamic Revolutionary Guards Corps (IRGC) General Eskandar Momeni told the government’s official news agency, IRNA.
In an attempt to control the free fall of the rial, the Rouhani administration announced an imposed rate of 42,000 rials to the U.S. dollar April 10. In addition to other protective measures, the government set strict limits on the activity of exchange bureaus and announced that any individual carrying more than 10,000 euros (roughly $12.5 thousand) would be prosecuted.
“The major assignment of police forces in the new Iranian year (which began March 21) is to confront those who are involved in exchanging illegal and contraband foreign currencies on the black market,” said General Momeni.
Momeni reported that 112 currency smugglers and sellers of contraband currency have so far been arrested, fifty exchange bureaus shut down, and 100 more cautioned.
Rouhani’s government has issued a 16-point plan for controlling the chaos in Iran’s forex markets, but economists are dubious about how effective the plan will be.
Paris-based economist Fereidoun Khavand has described the new policy of imposed unification of exchange rates as a “very dangerous game.”
“The reasons behind the disruption of Iran’s exchange market are mainly the confrontational foreign policy of the Islamic Republic, uncertainty about the future of the Joint Comprehensive Plan of Action (JCPOA), and its probable abrogation by President Donald Trump’s administration,” Khavand said in an interview with Radio Farda, referring to Tehran’s nuclear deal with world powers.
Meanwhile, Supreme Leader Ayatollah Ali Khamenei blames “foreign intelligence services” for almost all crises erupting in Iran, and told top intelligence officials April 18 that “The footprints of foreigners and their intelligence services were obvious in the recent chaos in Iran’s currency market.”
Rouhani’s administration has encouraged government bodies and firms linked to the state to increase their use of the euro at the expense of the dollar.