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Iran currency tumbles to new record low

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Iran currency tumbles to new record low Empty Iran currency tumbles to new record low

Post by Happy Life Mon Jan 23, 2012 9:58 am

Iran currency tumbles to new record low


by Mohammad Davari
AFP Global Edition

Jan 23, 2012 07:53 EST

The Iranian currency, the rial,
tumbled Monday in blackmarket trading to a new record low against the
dollar, news agencies said, as the EU moved to impose an oil embargo and
fresh sanctions on Tehran.






The unofficial rate in central Tehran was around 20,500 rials for the greenback, the official IRNA news agency reported.The
rate showed a 12-percent rise for the US currency since last Wednesday
when it was changing hands at 18,000 rials on the blackmarket.
The
Tehran government has tried to shore up the rial by imposing a lower
rate in banks and currency exchange bureaux, while also banning
transactions outside of such outlets, leading to the blackmarket
operations.
Last week, Iran's central bank banned the possession
of and transactions in foreign currencies, including the dollar, without
an official invoice, warning that offenders would be prosecuted.
The bank has introduced a dual rate of 11,300 rials for state business and imports, and 14,000 for Iranian travellers.
But
many exchange bureaux have refused to buy or sell dollars at the
imposed rates, prompting the operation of a blackmarket despite police
efforts to enforce the ban.
In late October, it cost about 12,500 rials to buy a dollar in Tehran.
A
rush for gold and other non-currency assets has since taken hold, with
the price of gold coins in Iran rising by 25 percent since January 18.
The currency crisis comes at a time when the United States and European countries are ratcheting up punitive measures against Iran to curb its controversial nuclear programme.
Although
the Iranian government has insisted there is no connection between the
rial's slide and new sanctions, some officials have admitted a
"psychological" impact as international sanctions spook ordinary
Iranians.
Economy Minister Shamseddin Hosseini and central bank chief Mahmoud Bahmani have vowed before the Iranian parliament to bring the exchange rate under control.
A sudden acceleration in the slide was seen after US President Barack Obama
at the end of December signed into law more sanctions hitting Iran's
central bank and targeting foreign firms which do business with the
Islamic republic.
On Monday, the European Union agreed to slap an
embargo on Iran's oil exports as the West ramped up pressure on Tehran's
nuclear drive and urged it to return to the negotiating table.
A
compromise agreement, due to be formally announced later the same day,
provides for an immediate ban on importing Iranian crude and a gradual
phase-out of existing contracts between now and July 1, diplomats in Brussels told AFP.
EU ministers were set to also target the country's central bank, petrochemicals and gold.
The sanctions would make it even more difficult for Iran, OPEC's second largest producer, to be paid in foreign currency for its oil exports, worth more than 100 billion dollars in 2011.
Previous rounds of EU and US sanctions targeting Iran's financial system have already caused a shortage of foreign currency.
Tehran
insists its nuclear work is designed to master civilian applications of
the technology, despite suspicions in the West that Israel's arch-foe is developing an atomic weapons programme.

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