The dollar is crushing the currencies of Turkey and Iran

The dollar is crushing the currencies of Turkey and Iran

Tehran to prove exchange rates

10/04/2018 - 11:38 Economy / world



Turkey and Iran are facing a major crisis: the continued decline in their currency prices against the US dollar, forcing Tehran to stabilize the exchange rate, while Ankara is moving to intervene in interest rates.

Tehran intervenes

Tehran united between the official exchange rate of the currency and its price on the open market, with the riyal falling to an all-time low on Monday on fears of a return to sanctions, state media reported.

The US dollar jumped over a day of 54,700 riyals to 60,000 riyals on the open market in Tehran on Tuesday.

The dollar was 36,000 riyals in mid-September.

After an emergency meeting of the Council of Ministers, the official media quoted First Vice President Ishaq Jahangiri as saying that "as of Tuesday, the price of the dollar will be 42 thousand riyals in both markets, and all business activities."

"As of Tuesday, the government will not recognize any exchange rate except the official price," he said. "Trading dollars at an informal price will be against the law."

The Iranian newspaper Arman in its main headline, yesterday, considered what is happening in the Iranian market an attempt to "coup" against the government through the currency.

While the newspaper "Sazendki" described it as "the sedition of the dollar."

Ankara appointed interest

In the near future, the Turkish lira lost about 6.5% of its value recently, and touched the lowest price against the dollar, to record 4.07 pounds per dollar, and exceed 5 pounds against the European currency.

Despite the large devaluation of the lira, Turkish President Recep Tayyip Erdogan remains committed to cutting interest rates to "save" investors.

The comments add to market concerns about Turkish monetary policy and inflation, analysts say.

Lira losses came this year on concerns that Erdogan's efforts to cut interest rates would lead to a more accommodating policy even as inflation remained at a level not far from the highest in 14 years.

Erdogan, who describes himself as an "enemy" of interest rates, wants to cut borrowing costs to boost investment and stimulate the economy. Investors worried about inflation and a large current account deficit say the central bank needs to tighten monetary policy to support the lira.

"How will there be investments if you do not cut interest rates?" Erdogan said in a speech in Ankara announcing a $ 34 billion investment stimulus package to help Turkish companies. We call it an investment-based incentive system. " "We must save the investor from high interest rates so that he can inject investments, and when there are investments there will be employment, production and export," he said.

Observers believe that political reasons, along with economic reasons, have contributed to a large extent to the deterioration of Turkey and Iran.

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