The reasons are many.. Why is the Iranian rial collapsing against the dollar?

After the rise in the price of the US dollar toppled the former governor of the Central Bank of Iran, Ali Saleh Abadi, 25 days ago, the local currency (the riyal) fell on Sunday to a new record, as the price of one dollar exceeded 452,000 riyals in the unofficial market.

The Iranian currency had regained a small part of its value this month, as the dollar fell from 440,000 riyals in the first week to 400,000 riyals in the second week of it, due to promises made by the new central bank governor, Mohammad Reza Farzin, regarding strengthening the value of the national currency.

After the relative stability witnessed by the riyal during the past two weeks, its price was disturbed again with news of possible European and American sanctions on Iraqi banks with the aim of restricting the besieged Iranian economy.

Historic collapse

In addition to the rise in the price of the dollar, the prices of the yellow metal witnessed a remarkable rise in Tehran, where a gram of 18 carat gold reached a new record and exceeded 20 million and 110 thousand riyals, at a time when the price of the euro reached 489 thousand riyals, according to exchange offices in the center of the Iranian capital.

And with the Iranian currency recording the highest collapse against a foreign currency since the victory of the Khomeini revolution in 1979, when the dollar was equivalent to 70 riyals at the time, but the riyal fell on the eve of the 44th anniversary of the victory of the revolution about 6,400 times against the green currency in the unofficial market.

Observers in Iran attribute the reason for the riyal’s loss of value to the politicization of the economy and its impact on international developments, especially developments in the nuclear issue and tension with the West, which is directly reflected in the increase in foreign sanctions and restrictions on the Iranian economy.

In the context, the Iranian economist “Albert Baghazyan” reads the fluctuation of the national currency in the context of economic plans affected by politics, explaining that the price of the dollar rose by about 5 thousand riyals following the European Parliament’s call to put the Revolutionary Guards on the list of terrorist organizations, while the US currency had It decreased by about 4 thousand riyals after the resignation of the former governor of the Central Bank of Iran, which confirms the close link between the national economy and the country’s foreign policy.

In a press statement published by Ekhtib News Agency, Baghazian searches for the reason for the depreciation of the riyal in the field of political disputes between Tehran and Washington on the one hand, and European capitals on the other, and believes that the solution lies in removing the specter of sanctions from the national economy.

The Iranian economist urges his country’s authorities to take serious action to release the besieged economy from the nuclear negotiations aimed at saving the nuclear agreement.

Relations between European Union member states and Tehran have deteriorated over the past few months as efforts to revive the nuclear deal falter, in addition to Tehran arresting a number of European citizens on charges of spying or inciting recent protests against the government.

government endeavors

Meanwhile, on Sunday, Central Bank Governor Mohammad Reza Farzin tried to reassure Iranians about their national currency, announcing that the country had no problem with its hard currency reserves, which recently rose to about $20 billion.

Farzin revealed, on a televised program, the release of 200 million dollars of Iranian assets in Iraq, stressing that the Central Bank continues to release all frozen assets abroad, and that its negotiations with regional partners have reached good results that will positively reflect on fixing the official exchange rate.

For his part, the economic researcher, Mueen Sadeqian, described Farzin’s promises as coming in the context of what is known as “speech therapy”, adding that the promises made by the “Central” ruler will relatively affect curbing the price of the dollar, but it is likely that the value of the riyal will continue to decline during the few months. coming.

Continue to collapse

Speaking to Al-Jazeera Net, Sadeqian proposes raising the interest rate and reducing the budget deficit as well as reducing tension with external powers to prevent the price of the dollar from rising and reaching new heights in the Iranian market, stressing that rampant inflation pushes the citizen to acquire hard currency to preserve the value of his money, which raises the demand for Dollar compared to limited supply.

He expected the Iranian government to pump hard currency into the free market to limit the continued collapse of the national currency, describing the effect of this policy as temporary, like the arrest of dollar brokers on charges of disturbing the national economy.

The researcher concluded that his country’s attempts to trade in national currencies with other countries will not be able to limit the decline in the value of the national currency, explaining that in light of the stability of the value of other currencies against the dollar, it will raise their prices in the Iranian market with the decline in the value of the riyal.

After the relative stability witnessed by the riyal after the signing of the nuclear agreement in 2015, turmoil returned to the Iranian currency following the US withdrawal in 2018 from the agreement, and since that time the price of the US currency witnessed booms against the riyal with the decline in the prospects for reviving the nuclear agreement. (Al Jazeera Net)