Iran’s currency rally has plunged to a new low amid growing economic uncertainty, rising inflation in the country and the conflict in neighboring Afghanistan.
Foreign currencies rallied against the new rial on Saturday, with the value of the US dollar surpassing 280,000 critics and reaching 283,000 in Tehran’s open market.
It is the lowest value in Iran’s currency since last October, when it hit an all-time low of 310,000.
The turmoil in Iran’s foreign exchange market comes amid a political transition, with the inauguration on Thursday of new Economy Minister and former Conservative lawmaker Ehsan Khandouzi.
There is still speculation about the appointment of a new head of the Iranian state bank, which observers believe has a significant impact on foreign exchange policy. The Central Bank of Iran has often intervened in the foreign exchange market through its exchange offices.
Amin Sabooni, a senior economic analyst and editor of Iran’s leading business newspaper, Financial Tribune, told the Anadolu Agency (AA) that factors responsible for the rial’s difficulty include a shortage of foreign currency, gaps in the fiscal budget, chronic inflation, central bank money printing machines that run all day and no economic roadmap of the new government.
“I have a feeling that the recent trend could be a de facto devaluation of the rial,” he stated.
The dramatic turn of events in neighboring Afghanistan and the fall of the western province of Herat, bordering Iran, on the Taliban have also affected Iran’s foreign exchange market.
The two countries are economically interconnected, as Afghanistan has traditionally been the main destination for Iran’s non-oil exports.
According to some reports, the volume of strong foreign exchange trading transferred to Iran from Afghanistan has amounted to about $ 5 million every day, which has dropped significantly in recent days.
Belongingly, the Iranian currency has lost more than 700% of its value against the US dollar since 2018, when the former US administration of Donald Trump reinstated sanctions on Tehran.