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Iran Limits Amount Of Foreign Currency People Can Keep

Various currency rates are displayed on a window of an exchange shop in downtown Tehran, Iran, Wednesday, Sept. 5, 2018. FILE PHOTO
Various currency rates are displayed on a window of an exchange shop in downtown Tehran, Iran, Wednesday, Sept. 5, 2018. FILE PHOTO

Amid economic crisis and a sinking national currency, the Central Bank of Iran has issued a new directive limiting the amount of foreign currency people can keep or carry.

From now on, every individual in Iran is allowed to keep or carry only up to ten thousand euros ($11,287), or its equivalent in hard currency, the CBI has said in its directive.

Based on the regulation, keeping or carrying more than 10,000 euros, or its equivalent will require multiple documents proving the person had authorization. These documents would be valid for a maximum of six months from the date of issue.

In recent years, the Iranian national currency, rial, has significantly lost its value against foreign currencies and has dropped more than ten percent this year. The main reason for the steep devaluation, which has fueled high inflation is U.S. sanctions imposed since 2018.

At the beginning of 2018, one U.S. dollar traded for fifty thousand rials, but now it has soared to 176,500. Many people have turned their money into dollars and other major currencies to protect their assets.

The spokesman for the Special Commission for the Protection of National Production last year said that citizens are in possession of $20 billion worth of hard currency cash.

Meanwhile, the Islamic Republic officials have never explained who would compensate people's loss if they refrain from saving their assets in foreign currencies, while the national currency keeps losing value.

Nonetheless, the Governor of the CBI, Abdul Nasser Hemmati, recently said that $280 billion - an average of $ 18 billion a year - had been injected into the local foreign exchange market over the past fifteen years to support the rial.

"Naturally, much of these currencies have been taken out of the country as capital," Hemmati maintained, adding, "All facilities purchased abroad [by individuals] have been backed by these outgoing hard currencies, i.e. by discounted dollars granted by the government."

There was even a scandal in 2018 when it was revealed that cheap dollars provided to import essential goods ended up in bringing thousands of luxury cars to the country.

While the value of one dollar against the Iranian national currency is nearly 176,500 rials in the open market, the government grants dollars at 4,200 rials to selected companies to import “essential goods”. But there have been many instances of fraud.

Members of parliament have criticized providing cheap foreign currency to importers as waste of money. "Ninety percent of the companies that received the (discounted) hard currencies were registered immediately before the announcement of the government decision, and existed only on paper," Ali Haji Deligani said.

He was referring to previous occasions when cheap dollars were doled out.

In 2018, thousands of companies applied to receive the cheap dollars but then it was revealed many had imported luxury cars or other non-essential goods or had imported nothing, pocketing the huge difference in exchange rates.

On January 28, the Islamic Republic Vice President Es’haq Jahangiri told Tasnim news, "Corruption has currently dominated the entire [Islamic]Revolution like termites. While some people are starving, others are lining their pockets with the national wealth."