Iran: Trading comes to a halt after currency hits new low

Iran’s currency fell to a new record low amid the nationwide anti-government protests and the breakdown of the 2015 nuclear deal. Traders in Tehran were exchanging the rial at around six lakh to the dollar on Sunday after the currency plunged further from five lakh rials for one dollar on Wednesday. Now, trading in Tehran markets has largely come to a halt as the currency rial is near its all-time low. The same grim news about a halt in trading came from the goldsmiths market in Tehran, where the fast-fluctuating currency rates have forced retailers to hold on to their gold and jewelry. Trading has also decreased in the food wholesalers’ market where one trader said goods such as sugar, oil and rice that can be stored have been shipped to warehouses, not to be sold until there is clarity with the value of the rial.

Local media reported that the Central Bank of Iran intervened in the currency market by injecting $700 million in UAE dirhams on Sunday and the rial marginally rose from its all-time low of 600,000 against the US dollar. But such a sizeable intervention has not produced the desired result of stabilizing the rial. First, the currency rose to 560,000 but after a few hours it dropped again, trading at more than 580,000 to the USD on Monday evening.

According to media reports, people have formed long lines in front of exchange offices in recent days, hoping to acquire increasingly scarce dollars. Many have seen their life savings evaporate as the local currency has deteriorated. Meanwhile, according to Iran’s statistics center, the inflation reached 53.4 per cent in January, up from 41.4 per cent two years ago. Iran’s currency was trading at 32,000 rials to the dollar when it signed the 2015 nuclear accord with world powers. Iran has been gripped by nationwide protests since September. Demonstrations broke out following the death of 22-year-old Mahsa Amini in the custody of the country's morality police.