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New U.S. Sanctions Hit Iran 'Psychologically' Says CBI Governor

Iran -- Tehran Forex market (Currency Exchange Market) on December 12, 2018.

A day after the dollar reached 300,000 rials, the governor of the Central Bank of Iran (CBI), Abdol Nasser Hemmati, said that the news concerning the Trump administration's plan to "completely cut off Iran's financial system" had a "psychological effect" on the Iranian foreign exchange market.

In a note posted on his Instagram account on Friday, October 2, Hemmati referred to the soaring prices of hard currencies in Iran's forex market, saying that the situation had led to "organized attacks, sometimes with specific targets, against the CBI."

The Trump administration is considering a plan to include new batches of sanctions to "completely cut off" Iran's economy from the outside world, Bloomberg News reported on September 29.

Washington is considering targeting more than a dozen banks and labeling Iran's entire financial sector off-limits, three people familiar with the matter told Bloomberg.

"Under the plan, the administration would blacklist roughly fourteen banks in Iran that have so far escaped U.S. restrictions, under authorities designed to punish entities associated with terrorism, ballistic-missile development, and human-rights abuses. The proposal is still under review and hasn't been sent to President Donald Trump," Bloomberg shared.

The proposed sanctions have two main purposes, to close the last remaining channels for the Iranian government to make money, and to create more hurdles for Joe Biden, the Democratic presidential candidate, to return the Joint Comprehensive Plan of Action (JCPOA) 2015 nuclear deal with world powers if won the November election.

In the meantime, the U.S. State Department says that humanitarian goods are exempt from current sanctions.

"Yet years of punitive measures imposed by the United Nations and now unilaterally by Washington have turned Iran into a pariah for most foreign banks and companies, with executives wary of infringing penalties," Bloomberg says.

If implemented, the new plan will affect Iran's banking operations and its exchange offices and informal remittances.

However, in his Instagram post, Hemmati expressed doubts about the effectiveness of the plan, writing, "I have positive news concerning Iran's blocked sources."

Hemmati was referring to Iran's blocked resources in several countries, including Iraq and South Korea.

Iran-- Head of Central Bank, Abdol-Naser Hemmati, 2019.
Iran-- Head of Central Bank, Abdol-Naser Hemmati, 2019.

Tehran says Baghdad owes more than $3 billion for Iran's electricity and gas imports, and Seoul has frozen $7 billion for the crude oil received from Iran.

The Iranian government has not yet reported on the total amount of its frozen assets abroad.

Meanwhile, the value of foreign currencies in Iran has significantly increased against Iranian national currency, the rial, in recent days.

The state-run Iran Students News Agency (ISNA) reported on Thursday, October 1, the U.S. dollar price in the Iranian open market rose again and broke the record of 300,000 rials. The selling rate of the Euro has also peaked up to 352,150 rials.

Based on the same report, the price of the 'Bahar-i Azadi' (the Spring of Freedom) gold coin exceeded 152 million and 200,000 rials. The figure shows an increase of nine million rials compared with the previous day.

Data provided by specialized gold price sites also show that the value of various gold coins in the Iranian open market increased by two to 5.4 percent on Thursday.