Iran scrambles amid 'economic war'

2012-09-09 02:09

Tehran - Iran's currency was on Sunday sliding to a new record low against the dollar, with the central bank saying it was trying to manage the plunge amid an "economic war with the world."

Street traders were exchanging one dollar for 23,710 Iranian rials, according to several specialised websites with real-time rates and one trader reached by telephone.

That represented a depreciation of more than 3% since Saturday and more than 8% since last Wednesday, when President Mahmoud Ahmadinejad admitted on state television that Western sanctions were causing "problems" in exporting oil and international financial transactions.

The latest street rate was nearly double the fixed, official rate of 12,260 rials that the government reserved for its agencies and a few privileged businesses.

Iran's rial has lost around half its value this year. It plummeted in January after the European Union and United States announced draconian sanctions that came into effect in July.

Although authorities have in recent months intervened to stop the slide - even briefly at one point trying to impose a cap on the rate -the rial has returned to shedding value.

The depreciation has added to inflation, which the central bank puts at 23.5% but which outside observers say is much higher. Food and imported goods have become much more costly.

Market uncertainty has been exacerbated by bellicose rhetoric from Israel, the Middle East's sole though undeclared nuclear weapons state, which has threatened air strikes against Iran's nuclear facilities.

"The central bank cannot systematically lower the exchange rate, but we have attempted to control it," Central Bank chief Mahmoud Bahmani told reporters, the ISNA news agency reported.

"Our situation is one of war. We are fighting an economic war with the world," he said.

Iran's authorities have vowed not to cede to the sanctions pressure, saying they will maintain their nuclear activities they insist are purely civilian in nature.

EU foreign ministers meeting in Cyprus on the weekend said they were considering imposing further sanctions on Iran, voicing frustration at negotiations with the Islamic republic that have all but stalled.

The so-called P5+1 group comprising the five permanent UN Security Council members plus Germany suspect that Iran may be trying to develop a nuclear weapons breakout capability.

The UN Security Council has imposed sanctions of its own to press Iran to curb its nuclear activities.

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  • fred.fraser.12 - 2012-09-09 16:14

    The Iranian regime adjusts elections to hold onto power. It has stolen the Iranian government from the Iranian people. It funds the Jihadist movement that has killed and maimed hundreds of thousands of innocent people, mainly Muslims in the Middle East, Africa and elsewhere. It is supporting Bashar Assad's brutal oppression of Syrians wanting nothing more than the right to vote. It supports the stoning of women. It openly calls for the elimination of Israel and denies the Holocaust, the single biggest attempt at human genocide in human history: six million people exterminated. It is dishonest, highly repressive, and self-serving at the expense of the Iranian people. Unfortunately our government allows one of its licensees, MTN, to do business with this regime, notwithstanding what we went through under Apartheid. It even allows MTN to do business with Bashar Assad, the unelected, brutal dictator of Syria.

      fred.fraser.12 - 2012-09-10 14:31

      Exactly where is the West doing those things?

  • wwrer.ww - 2012-09-14 09:16

    draconian - means a small offence gets heavy punishment - Oh please. Fin24's reporting is not neutral.

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