Accessibility links

Breaking News

Iranian Currency Drops Further As EU Fails To Deliver For Iran

Forex black market in the city of Marivan, in Kordestan province near the Iraq border.
Forex black market in the city of Marivan, in Kordestan province near the Iraq border.

The Iranian currency, rial, took yet another plunge Tuesday morning September 25, and the rate of exchange for the US dollar in Tehran rose to over 160,000 rials , in an apparent reaction to the lack of a prospect for rapprochement between Iran and the United States, and as EU's effort to save the nuclear deal with Tehran failed to bear fruit.

The nose-dive in the value of rial came after Iranian and EU officials' meeting in New York on Monday reached no tangible result and a senior U.S. official told European diplomats that their efforts to save the deal by protecting EU investments in the Islamic republic were "pointless."

According to a Reuters report, European diplomats have "acknowledged that the official was right" that the EU cannot save the deal "just six weeks until the next wave of U.S. sanctions hits Iran on November 4."

Meanwhile, President Hassan Rouhani's remarks shunning the possibility of talks with the US, in New York, where he is taking part at the UN General Assembly meeting seems to have created an atmosphere of disillusionment and despair in the Iranian market.

Referring to Rouhani's negative comments, Iranians on social media begged him not to talk about the Iran-US ties in his UNGA speech as this will lead to higher prices and further devaluation of the rial.

One Twitter user says, "the rate of exchange for US dollar rises higher with every word Rouhani utters."

In the meantime, the rise from Rls150,000 to over Rls160,000 shook the Forex market like breaking the sound barrier, while traders expect further devaluation of the national currency in the days to come.

Every Euro was traded for 185,000 and each GBP for over 200,000 rials at the Tehran market Tuesday morning.

Reports from Tehran say money-changers stop buying and selling foreign currency by mid-day fearing further fluctuations.

Iranian Students News Agency, ISNA quoted some money-changers in Tehran as saying that they expected a rise of up to 250,000 rials for each dollar in the forex market.

Apparently, more optimistic traders told ISNA that the rate may come down after occasional hypes and would finally be stabilized between 120,000 to 140,000 rials per dollar.

Iranian analysts link the chaos in the forex market to various factors including Saturday's attack on a military parade in Tehran, the failure of talks with Europe, ambiguities about Iran's position on ratifying international financial agreements, demanded by the FATF, as well as Rouhani's disappointing comments in New York.

Regardless of the failure of Rouhani's economic policy during the past months, the governor of Iran's Central Bank Abdolnasser Hemmati has told the press that the rates of exchange would eventually come down "in an almost managed way," whatever that means. But these sorts of comments obviously do not resonate with businesses and the people in Iran, who are pessimistic about their country’s prospects.

In the meantime, while according to Reuters, "the European Commission's boldest idea is for European central banks to pay Iran directly for oil in euros and bypass the U.S. financial system," not only there is no indication that banks would listen to governments, European companies have left Iran fearing US sanctions could also affect their business in other countries.