TL;DR: Journalist and pundit Heshmat Alavi revealed, “The U.S. dollar is selling at 220,000 rials in Iran. People in Tehran are seen rushing to purchase U.S. dollars, knowing the country’s currency will nosedive even further. Reminder: In 1979 the U.S. dollar was trading at 70 rials.”
Iran Rial Selling at 220,000 to 1 US Dollar
Last month the ﷼ (IRR) exchange rate plunged to 190,000 against the USD. Various online sources have it now hovering around the 220,000 IRR to USD, a drop so severe as to put it in the class of countries like Lebanon, Venezuela, and Argentina. Economic trouble for Iran isn’t mysterious: for years it has been involved in an international sanctions battle led in large part by the United States. The Trump administration has only tightened those screws.
Furthering devaluation is fiscal policy from the Islamic Republic’s central bank. It has begun flooding the exchange markets with IRR, described as a targeted move, but that in turn incentivized traders to horde USD. Viral video (see embedded tweet below) shows Iranians rushing to snap up as many US dollars as possible in order to retain some store of value.
The U.S. dollar is selling at 220,000 rials in #Iran.
People in Tehran are seen rushing to purchase U.S. dollars, knowing the country's currency will nosedive even further.
In 1979 the U.S. dollar was trading at 70 rials. pic.twitter.com/XSMsl29vz3
— Heshmat Alavi (@HeshmatAlavi) July 6, 2020
Deficits too play a role, as the nation’s bread and butter export, oil, took a notorious dive this year when OPEC and Russia clashed over prices. The scene by Spring was downright bizarre: off the coast of California $20 million barrels worth of oil floated in tankers unable to dock and unload, for example (a scene repeated across the globe as barrel prices went negative). Beyond sanctions and volatile oil prices, the coronavirus pandemic also contributed to the current crises, experts insist.
Ironically, the USD seems to be one of the few stable financial lifelines holding up whatever is left of the Iranian economy. However, that comes at a real cost. The International Monetary Fund (IMF) forecasts $36 billion in reserves being effectively “lost” through 2021 if something does not change. Inflation, also according to the IMF, is more than 34% this year alone. “Between 2015 and 2020, Iran’s currency has seen over 500 percent loss in value against the US dollar,” Syed Zafar Mehdi of Anadolu Agency noted.
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