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Iranian Currency Takes Big Hit, Falling To New Record Low

Young man wearing a protective mask due to the COVID-19 pandemic, checks the currency exchange rates in Tehran, Iran. June 22, 2020

Iran’s currency took another big hit on Monday, falling to 234,000 rials against the U.S. dollar despite official promises to prevent the further devaluation of the national currency.

The Iranian rial for the first time ever fell to 200,000 against the dollar on June 24 and the plunge has continued since. The rial is also traded at more than 260,000 against the euro too.

Since the beginning of the current Iranian year, starting March 21, the Iranian rial has lost nearly 45 percent of its value.

Authorities have been saying the current trend of devaluation is "temporary" and the market will recover soon. They attribute the plunge in the value of rial to "international psychological operations and unfounded anxieties" as well as the impact of the COVID-19 pandemic on the economy.

The Iranian currency began its steep fall in 2018 as the U.S. withdrew from the 2015 nuclear agreement and reimposed heavy sanctions. Iran's crude oil exports have declined by more than 90 percent, cutting off foreign currency earnings for the state.

In recent weeks, the government is scrambling to find foreign currency revenues by putting pressure on exporters to repatriate earnings to the country.

President Hassan Rouhani and the Governor of the Central Bank of Iran (CBI) Abdolnaser Hemmati have blamed the drop in the availability of foreign currencies in the market on exporters.

President Rouhani has said 20 billion euro for the goods exported in the final months of the Iranian calendar year corresponding to February and March has not returned to the country and threatened the exporters to legal action.

In a note published last Monday on his Instagram account, the governor of the Central Bank also promised to offer "more incentives" to exporters who make the currencies they have earned available to the currency market in Iran.

According to the Institute of International Finance (IIF), the country's reserves were to fall to $73 billion by March with the deepening of Iran's recession and the fall in oil sales caused by the crippling U.S. sanctions.