Why Iranians are paying a lakh for a dollar

NEW DELHI: Iran‘s currency rial fell to a record low of 1.12 lakh to a on Sunday amid a deepening economic crisis and imminent United States‘ sanctions.

US is due to reimpose a first lot of sanctions on Iran‘s economy on August 7. It had pulled out of a 2015 deal under which international sanctions on Iran were lifted in return for curbs on its nuclear programme.

The government attempted to fix the rate at 42,000 in April and threatened to crackdown on black market traders.

But the trade continued with Iranians worried about a prolonged economic downturn turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop.

With banks frequently refusing to sell their dollars at the artificially low rate, the government was forced to soften its line in June, allowing more flexibility for certain groups of importers.

The handling of the crisis was one of the reasons behind last week‘s decision by President to replace central bank chief, Valiollah Seif.

The Iranian currency was 70 to a dollar during the 1979 Islamic revolution and has steadily lost value. When President Hassan Rouhani took over in 2013, one dollar bought 36,000 rials.

(With agency inputs)
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