Economy, Business And Markets

Iran Gov’t Opposed to Rial Devaluation

Gov’t Opposed to Rial Devaluation
Gov’t Opposed to Rial Devaluation

The government spokesman has announced that the administration is against any irrational devaluation of rial against the US dollar since its policy is to manage the rates of foreign currencies in a floating system.

Mohammad Baqer Nobakht was responding to reports that accuse the government of pushing up the rates of US dollar and gold coins in the domestic market to fix its hefty budget deficit.

“The government does not benefit from the devaluation of national currency since it will have inflationary effects on other commodities, which is against the administration’s macro policies,” Nobakht was also quoted as saying by IBENA.

The greenback and gold coin started rallying in Iranian markets about two weeks ago, as their value registered consecutive gains during the period.

According to Tehran’s forex market activists, an uptick in Emirati dirham’s remittance rate, speculative activities and fears that US President Donald Trump might pull out of the nuclear accord are triggering USD’s surge.

Nobakht, who is also the head of Planning and Budget Organization, noted that President Hassan Rouhani is aware of the growth of USD rate and the value of national currency, as he seriously follows the issue during Cabinet meetings.

“When nuclear sanctions were still intact, the administration managed to reduce the inflation rate, so even with Trump’s threats, we should not allow chaos to enter our markets,” he added.

Trump is expected to announce next week that he will decertify Iran’s nuclear deal, by claiming that it is not in the national interest of the United States. The move would mark the first step in a process that could eventually result in the reinstatement of US sanctions against Iran.

The government spokesman emphasized that Iran is a powerful and stable country that has proven its capabilities in managing the economy even in the most difficult situations and these threats only work if Iran lets them affect its markets.

“The administration will act against these fluctuations with strength and people should also help defend our country in this situation,” Nobakht added.

He refused the claim that the real value of USD exceeds 50,000 rials as some economic experts claim, noting that these rumors are only meant to increase the US dollar’s rate in the market.

“Only those who have been hoarding dollars will benefit from the devaluation of national currency,” he said, warning that the government will not allow a small group of people to exploit this situation.

This is while Seyyed Razi Haj-Aqamiri, a board member at Tehran Chamber of Commerce, Industries, Mines and Agriculture, believes that the recent rally of USD in Iranian markets is not linked to Trump’s decision about the nuclear deal, but is a result of the government’s new policy for managing the forex market.

“It seems that the government has decided that in order to improve the current situation of the economy, it is necessary that USD reaches its real value in the market,” Haj-Aqamiri told TCCIM’s official news website.

The TCCIM board member noted that non-oil exports will increase along with the USD rate, which will help inject more money into the economy.

“The last time when the rate of US dollar exceeded 40,000 rials in the domestic market, the government made the mistake of forcefully pushing it down since these market interferences lead to bigger jumps later,” he added.

 According to Haj-Aqamiri, there is no limit for the USD to reach its actual value in the domestic market, as the country’s economy determines the foreign currency rates in the market.

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