Skip to comments.Iran's Tumbling Rial Undermines Its Support of Syria's Economy
Posted on 10/09/2012 4:59:54 PM PDT by SunkenCiv
Last week, the Iranian rial continued its historic slide, falling to a record low against the U.S. dollar. Over the course of the week, the price of one dollar in Tehran rose from 34,200 rials to 37,500 -- a 10% drop in the rial's value. In fact, the currency has lost 75% of its value in one year. In late 2011, the price of the dollar was 13,000 rials. The latest slide in the value of the rial may well have been expected given recent trends, but the severity and speed of the drop surprised many...
prices in Iran have reached new highs, particularly the cost of imported goods and local goods made from imported materials. Such price inflation typically triggers a demand for higher wages. To avoid calls for higher wages, and to mitigate its inability to pay for imports and increased local demand for foreign currency, a government will sometimes deliberately devalue its currency to limit imports and consumption. But there are deeper issues at the root of Iran's problems. The latest drop in the rial's value reflects the seriousness of the economic crisis in Iran.
The sharp decline is due in part to Iran's loss of many of its hard currency sources. The blockade on Iranian oil exports, estimated to be costing the country $40 billion to $50 billion per year, is forcing Iran to sell its oil to countries like India and China at discounted prices, while Iran incurs shipping, transportation, and insurance costs. This is happening when domestic demand for foreign currency is increasing.
...Minister of Industries and Business Mehdi Ghazanfari seemed to [blame] the opposition in Iran... said he hoped the Iranian security services would clamp down on the speculators responsible for the currency's decline.
(Excerpt) Read more at al-monitor.com ...
A money dealer counts Iranian rial banknotes in his office in Baghdad, Jan. 30, 2012. (photo by REUTERS/Saad Shalash)
Timothy Geithner welcomes India’s market reforms
Iran is bypassing some of its economic problems by asking that oil purchasers pay in gold instead of dollars. India and China, just to name two, are obliging.
Who wants to be an Iranian millionaire???
Thank you for the post.
India doesn’t pay in gold. India uses Turkey’s Halkbank to route dollar payments to Iran.
I was going by articles such as this. You may, indeed, be correct, though.
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