TEHRAN, Dec. 30 (Xinhua) -- It is not a new story -- the fall of Iran's currency rial against the U.S. dollar and consequently decline of people's purchasing power.
But the recent growing depreciation has caused grave concern in the foreign exchange market and financial circles, as the greenback was sold for 430,000 Iranian rials on Thursday, hitting another high in the country's history.
According to market analysts, the Iranian currency has lost over 20 percent of its value since mid-September, when a woman's death in police custody triggered nationwide protests and unrest.
Ali Salehabadi, former governor of the Central Bank of Iran, has blamed the turbulence in the forex market on the unrest. He was replaced by Mohammad Reza Farzin on Thursday as the new governor of the Central Bank of Iran, a move that was widely seen as Iran's latest effort to contain the accelerated fall of its currency's value against major foreign currencies in the past weeks.
Salehabadi also noted other destabilizing factors, including the U.S. sanctions.
The sanctions were reimposed on Tehran after former U.S. President Donald Trump's decision to abandon the Iranian nuclear deal in May 2018 and added by U.S. President Joe Biden's administration over a host of accusations, including alleged supply of Iranian drones to Russia for use in the Russia-Ukraine conflict.
The sanctions are now nowhere near their removal, as Washington has repeatedly said that the talks on the revival of the Joint Comprehensive Plan of Action (JCPOA) are not on its agenda, and the focus is on what's happening in Iran.
Among other factors behind the slumping currency are Iran's funds blocked abroad due to the sanctions, capital flight, absence of foreign investment, and speculative trading.
Hassan Ziaei, an Iranian economic expert, in an interview with the semi-official Fars news agency, said the "enemies' media war against Iran" is another reason for the sharp drop in the rial value.
He argued that their propaganda is aimed at prompting people to withdraw their deposits from banks and buy dollars, other hard currencies or gold in an effort to protect their savings.
Kamran Nodri, also an economic expert, talking to the Iranian Students' News Agency, cited the liquidity growth, budget deficit, low economic growth and productivity, as well as bad economic governance in the past two decades as among the long-term factors behind the spiraling prices of hard currencies.
He pointed to negative news on internal affairs and international relations as one of the short-term factors for the increase in the dollar price, giving examples such as the government's delay in submitting the budget bill for the next Iranian calendar year (to start on March 21) to the Parliament as well as the uncertain fate of the JCPOA and fresh sanctions against the country for domestic and international problems.
Given the factors behind the unprecedented weakening of the Iranian currency, the government is expected to push for the restoration of the nuclear deal in an effort to revive its flagging economy after the removal of the crippling sanctions, said the experts.
To this end, the government has intensified its crackdown on foreign currency speculation. The country's Judiciary and Finance Ministry are cooperating to identify and arrest disruptors of the foreign currency market.
The Economic Security Police in Tehran province also announced that 88 people have been arrested for illegal involvement in the future trading of foreign currency and gold through launching channels and groups on social media platforms.
A report by the official news agency IRNA said that hundreds of bank accounts used by individuals for illegal money-changing activities have been blocked by the Iranian Intelligence Ministry.
However, the main solution to the economic crisis is the removal of the sanctions through stepping up diplomatic efforts to bring the JCPOA back on the right track, analysts said. ■
