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Sudden Rise Of Dollar In Iran Stops Currency Trading On Free Market

A photo published on Twitter shows the dollar rate in one of Tehran's exchange offices at 58,000 rials on Sunday April 08, 2018.

Iran’s currency took another big hit, falling between 6-9 percent on Sunday, extending a slide to a new record low on continued concerns over a return of crippling sanctions if U.S. President Donald Trump carries out his threat to exit a nuclear deal with Tehran.

The U.S. dollar jumped to as much as 58,000 rials on the open market in the capital Tehran, according to some reports.

Parliament on Sunday invited the economy minister and the central bank governor to attend a closed session on Tuesday to discuss the accelerating fall of the national currency, Iranian news agencies reported.

Local media reports on Monday indicate a freeze of trading on open market. Exchanges are displaying 55,000 rials to the dollar on their screens but actually they are reluctant to buy and sell.

However, official bank exchanges are open and selling the dollar for 49,000 rials. There are long lines in front of the banks. People are able to buy small amounts of dollars with the lower rate.

The rial had fallen to 47,000 to a dollar in early February from about 36,000 in mid-September on concerns about Iran’s agreement with world powers to curb its nuclear program in return for the lifting of most international sanctions.

Trump said in January that “disastrous flaws” in the agreement had to be fixed or Iran would face a U.S. exit.

Since last year, the central bank has allowed the rial to depreciate gradually to compensate for Iran’s high inflation and to help to make exports more competitive.

But the drop has accelerated in the past few months, creating a problem for authorities who contained a wave of popular protests against economic hardship and corruption in December and January.

With reporting by Reuters