The Iranian currency continues its decline to historic low levels this week, in light of the political instability and economic situation in Iran.
The riyal lost a third of its value this year only against the US dollar, reaching 60 thousand riyals per dollar, which caused the rush of Iranians to sell the currency and buy the green card; fear of greater losses of the Iranian currency during the coming period.
To quell the escalating panic, Tehran announced this week that it was setting the official exchange rate at 42,000 riyals to the dollar, threatening severe penalties for anyone trying to beat that price.
A change in Iran’s policy, with new restrictions on foreign currency holdings, is likely to succeed in halting the riyal’s collapse in the near term, the US-based CNBC news agency quoted a bourse note from the Eurasia Consulting Group as saying.
She said the government had enough foreign reserves to withdraw, but that would hurt Iranian imports and exports, which find it difficult to access the currency from the government and rely more on the black market.
The signing of the Iranian nuclear deal in 2015, which lifted many of the economic sanctions imposed on Tehran in exchange for restrictions on its nuclear program is a factor supporting the economy of the country.
Iran has also failed to attract as much foreign investment as it expected after easing economic sanctions.
But with US President Donald H. Trump’s opposition to the deal and his announcement of a possible lifting of economic sanctions against Iran in May, Iran’s currency was negatively affected.
For its part, Iran has threatened that the US president will regret in the event of announcing his departure from the nuclear agreement.
Eurasia predicts that 65% of the Trump nuclear deal will collapse, which will make the Iranian economyclose to collapse.
The memo added that the return of sanctions is likely to put severe pressure on the Iranian economy and cause a rise in demand for the dollar, making it difficult to keep the government at 42 thousand riyals per dollar under these circumstances.