Despite efforts by the central bank to reduce demand for foreign currency from savers concerned about inflation and the country’s economic prospects, the value of the Iranian rial fell to a historic low versus the dollar on Saturday.
Against the dollar, the rial was selling at 575,000 on the unofficial free market, up from 540,000 on Friday, according to the currency exchange website Bonbast.com. The pricing was listed as 575,000 on the website bazar360.com as well.
Iranians have been seeking to preserve the value of their money by purchasing foreign currency or gold as the country experiences yearly inflation rates of more than 50%.
The central bank relaxed a prohibition on private exchange shops selling hard currency on Saturday in an effort to calm the market and reduce demand for dollars.
It created an exchange center last week to enable common Iranians to buy foreign currency, but some market observers claimed the action had not yet reduced demand for dollars.
The fervor on the futures market has increased, contrary to some analysts’ expectations that it would with the launch of this center, according to the economic website Ecoiran. The dollar has also continued to rise.
Since widespread demonstrations began in September in response to the murder of a young Iranian Kurdish woman while in police detention, the rial has lost approximately 45% of its value.
One of the major threats to theocratic government in Iran since the Islamic revolution in 1979 has come from the turmoil.
According to currency dealers, the turmoil, Iran’s growing isolation due to Western sanctions over its human rights record, and Russia’s use of Iranian-made drones in Ukraine are all contributing factors to the rial’s decline.
By restricting Tehran’s access to foreign cash and oil exports, President Donald Trump’s 2018 reimposition of U.S. sanctions has hurt Iran’s economy.
Iranian economic prospects have been worse since September when negotiations between Iran and foreign powers to limit Tehran’s nuclear program in exchange for the easing of sanctions broke down.
