The Iranian Rial has halved its value since April 2018. In a bid to place a plank under its bottom especially since U.S. sanctions are likely to be imposed sometime this week, Iranian state TV reported that foreign exchange rules will be eased.
With the near vertical drive of the Rial and with soaring inflation, the country is witnessing spontaneous organic demonstrations against profiteering and corruption.
The central bank has squarely the blamed the fall of the Rial on “enemies” of the state. The judiciary stated, thirty six have been arrested, including a former deputy central bank governor and five foreign exchange dealers.
A state body led by Iranian President Hassan Rouhani which includes the heads of the parliament and judiciary, lifted a ban on sales of foreign currencies at floating rates thus allowing exchange bureaux to sell the Rial at unofficial market rates for purposes such as, traveling overseas.
The lifting of the ban on trading in the Rial, reverses a decision taken in April which banned trading currency outside the rate of around 42,000 rials to the dollar.
Ahead of the announcement on Sunday, the Rial perked up and was seen trading at 98,500 to the dollar, according to Boncast.com, a foreign exchange website.
“This shows our power. The same day you (Americans) impose sanctions we open our economy. We have no problems, so why should our people worry?,” said Abdolnaser Hemmati in a live televised interview that reflects Iran’s self-confidence in the face of looming U.S. sanctions.
In order to support the Rial, Hemmati stated the central bank would allow a “managed float” of the currency’s exchange rate and try to avoid using up its reserves.
“The central bank will try not to interfere in setting the price of hard currencies, which will be determined by supply and demand, however, the bank’s supervision will prevent unbridled (market swings) and the creation of a black market,” said Hemmati.
Further, so as to encourage Iranians to invest in the domestic economy, the central bank plans on setting up a dollar savings accounts for ordinary people, said Iran’s state television. Non-oil exporters will be allowed to sell hard currency to importers, and there will be no limit on bringing currency or gold into the country.
The Rial will be made available at a subsidized rate for purchasing basic goods and medicine, said state television.