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Rial at its Lowest Against Dollar, Again

IRAN -- Iranian and U.S. banknotes are on display at a currency exchange shop in downtown Tehran, April 4, 2015

The Iranian rial fell to a record low against the U.S. dollar on Saturday as the Islamic Republic's economy struggles with the COVID-19 pandemic and U.S. sanctions.

Several media outlets and Telegram channels allocated to forex news in Iran reported that the dollar's price in the Tehran foreign exchange market again reached the record level of 260,000 rials.

This is the second time in the last two months that the dollar's rate reached 260,000 rials. Earlier, on July 19, the dollar exchange rate in the Tehran foreign exchange market also soared to 260,000 tomans for a few hours.

During the past months, along with severe exchange rate fluctuations in the local market, the Central Bank of Iran (CBI) has tried to prevent further rises in the dollar's rate and sharp changes by injecting a limited amount of hard currencies into the market.

Furthermore, the Islamic Republic police and judiciary officials have also stepped in to periodically detain individuals and charge them with "disrupting the foreign exchange market." None of these measures, however, have helped the market to stabilize.

The Iranian rial, IRR, has lost about 49% of its value in 2020, following a drop in oil prices that has intensified pressures on the economy.

Last Friday, the CBI Governor, Abdolnaser Hemmati, lamented in an Instagram post that the Iranian economy was "under the most severe pressures" and "many factors are beyond (government's) control."

Failing to stabilize the forex market has led to the conservative allies of the Islamic Republic Supreme Leader Ayatollah Ali Khamenei to call for closer ties with China and Russia as the last remedy for Iran's chaotic economy.

As a member of the Majlis ranian Parliament, stressed on Saturday, "To overcome economic problems overshadowing Iran, the country needs to broaden and enhance economic ties with the countries including Russia, China, and Turkey."

Speaking in an interview with the state-run Mehr news agency (MNA) on Saturday, Kazem Delkhosh stressed, "A major part of the country's economic problems is because we have not used the capacity of regional and friend countries, especially in the economic, monetary and financial fields optimally."

Presently, Iranian currency is depreciating, Delkhosh said, adding, "In contrast, foreign currencies such as 'euro' and 'dollar' are becoming more expensive day by day, and a drastic solution must be found to solve this problem."

Delkhosh reiterated that Iran should use powerful countries like China and Russia to counter sanctions optimally. "Consequently, the government should expand its trade and business ties with its allied nations, Delkhosh said in the story.

However, Delkhosh did not elaborate on how China and Russia could contain the rial's downfall and end fluctuation in Iran's forex market.