The rial rallied on Saturday paring much of its losses during the past week even as the US sanctions on Iran's oil exports are certain to take effect by Monday. According to reports from exchange bureaus, the US dollar was traded for 143,000 rials, down from 150,000 rials on Thursday.
The national currency was quoted at 165,500 to the euro and 185,000 rials to the pound, gaining against both currencies by 7,000 rials. Bahar Azadi gold coin was also down Saturday, with the benchmark coin fetching 45 million rials ($325).
With the economy in turmoil, the rial is now worth 72% less today than one year ago but much of the impact of the renewed sanctions has already been baked in. Almost all multinational corporations that do business in the US have stopped doing business in Iran so as not to run afoul of the sanctions.
Pouya Jabal Ameli, a monetary analyst with the Central Bank of Iran believes that rial's rally is not only an indication that the effects of sanctions have already been baked in, but is also a telltale sign about the Iranian economy's 'resilience."
"While in the face of US sanctions the rial should have lost more of its value, we are witnessing the opposite," Jabal Ameli told the Financial Tribune.
Asked if the CBI interventions was a major reason behind the bear currency market, Jabal Ameli said forex injections by the central bank are a routine matter and could not be an influential factor behind the phenomenon.
The US is trying to force a worldwide ban on Iranian oil as it reimposes the sanctions that were suspended as part of the 2015 nuclear deal from which the US withdrew in May.
After President Donald Trump withdrew from the deal, which he had lambasted on the campaign trail, the US gave countries and private businesses around the world 180 days to stop importing Iranian oil or face Trump’s wrath.
Some Pain
Though only a handful of countries support the US withdrawal from the nuclear deal, unilateral sanctions are expected to cause pain simply because most oil and financial transactions are conducted in US dollars.
This round of sanctions targets Iranian oil, a lifeline of the economy. It also affects shipping, insurance and financial transactions.
In August, the US resumed sanctions prohibiting transactions involving the greenback, Iranian automobiles and the purchase of commercial aircraft.
In an instagram post late Friday, CBI governor Abdolnasser Hemmati wrote that with the US policy to zero out Iran's oil exports hitting a snag, Iran's foreign currency earnings and its trade atmosphere now gets clearer.
Hemmati said foreign currency reserves are at "optimal level" and even if oil exports are reduced to zero, the CBI would deal with the situation.
"The CBI has a focus on the stability of the monetary and currency markets and is working to gradually strengthen the national currency, increasing economic competitiveness and forestalling volatility," Hemmati wrote.
US officials said Friday that the country will allow eight nations to temporarily keep importing Iranian oil after sanctions are reimposed on Monday. In a statement, the EU said it "regretted the further re-imposition of sanctions by the US, due to the latter’s withdrawal from the Joint Comprehensive Plan of Action." The EU added that their efforts have been intensified in recent weeks to save the JCPOA, particularly those underpinning the European initiative to establish a Special Purpose Vehicle.
