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Iran's Currency Hits A New Low Following Tough Resolution By UN Watchdog

A 100,000 rial banknote which is now worth just 50 cents. In 1978, before the Islamic revolution 100,000 rials could buy $1428.

The devaluation of Iran's currency continued Sunday, June 20, with the exchange rate getting closer to 200,000 rials for one U.S. dollar. The price of gold also increased leaving the whole economic outlook in the country uncertain.

Along with the dollar all other major currencies also rose on Tehran’s free exchange market, with the euro hitting 210,200 rials.

The dollar hit a high of 199,770 rials on Sunday, a 500-point rise in just one day. This is a 2,850-fold fall for Iran’s currency since 1978, when during the monarchy just 70 rials was worth one dollar.

The rial has depreciated more than 30 percent this year after a five-fold drop since 2018, when U.S. sanctions were imposed on the Islamic Republic to force negotiations with Washington over nuclear and missile issues.

In 2015, when the nuclear agreement was signed between Iran and world powers the exchange rate was 32,000 rials to the dollar.

The coronavirus pandemic has played its role in the past four months to weaken the rial, but this most recent fall in value is tied to a resolution passed by the UN’s nuclear watchdog, IAEA on June 18, according to economic commentators in Iran.

The governor of Iran’s Central Bank Abdolnasser Hemmati tried to prevent the downward trend last week by promising to supply dollars for the exchange market, but so far it has had no impact on boosting the rial.

U.S. sanctions have reduced Iran’s oil exports by 90 percent, depriving the government of its major foreign currency income. President Hassan Rouhani on Sunday ordered the central bank to make sure exporters return the foreign currency they earn to the country.

Last week, Iran’s first vice president announced that Iran’s oil income has declined from a high of $100 billion dollars annually to just 8 billion dollars because of U.S. sanctions.