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06 June 2023

Iran currency soars 21% on intervention


Iran's currency has soared an unprecedented 21 per cent in the past two days on central bank intervention to reverse a sharp slide after the US enacted extra economic sanctions, media reported Wednesday.

On Tuesday alone, the currency, the rial, posted 14 per cent over its closing value on Monday in the open market, according to a specialised foreign exchange website.

The central bank stepped in Monday to reverse a 12 per cent slide that occurred after US President Barack Obama on the weekend signed into law new sanctions targeting the bank and Iran's financial sector.

The rial was trading at 14,000 to the dollar on Wednesday, a much stronger level than the record-low 17,800 it was fetching early Monday before the central bank intervened.

Iranian Commerce Minister Mehdi Ghazanfari said Tuesday the central bank had been asked "to inject more foreign currency into the market, and the central bank has promised to do so," according to the official IRNA news agency.

He added that the government was considering "a number of measures to control the exchange market." He did not say what they were.

Foreign ministry spokesman Ramin Mehmanparast said the rial's volatility "definitely has nothing to with sanctions."

He imputed the movements to domestic shifts in capital, for instance into the real estate sector.

The head of the central bank, Mahmoud Bahmani, said the sudden fall of the rial was "due to psychological effects."

"I declare absolutely that the international sanctions have not created any economic problem for the country. The enemies know that and are trying to create psychological tensions. But we won't play their game," Bahmani said.

He urged Iranians to refrain from buying dollars.

US and other Western nations have imposed sanctions on Iran's economy over Tehran's controversial nuclear programme.

Iranian economic experts have been called to a meeting at the central bank on Wednesday to address the issue of the rial's volatility, Mehmanparast said.

According to Opec, Iran gets 80 per cent of its foreign revenues -- around $100 billion over the past year -- from oil exports.

The country's budget has been calculated on the basis of 10,500 rials to the dollar.