Iranian Regime Under Fire for Faltering Economy

NCRI-US Staff, 25 April 2018

On Tuesday April 10th, the Iranian government declared the exchange rate for the United States Dollar (USD) to be 42,000 Iranian Rials (IRR) and prohibited sales extending beyond this price. The regime claimed to not have a foreign exchange problem, and that it would insert a sufficient amount into the market if needed. However, on Saturday April 14th Iran’s central bank announced there would not be any additional foreign currency inserted into the market.

According to Radio Farda (Radio Tomorrow) “Fereydoon Khavand, financial analyst residing in Paris, has told Radio Farda that affecting the market using a directive or decree, or through disciplinary and emergency action, is very difficult, if not impossible”.

On April 12th Vice President Jahangiri, countered saying “many of the issues surrounding the exchange rates are political; it’s not that anyone has intervened to raise the prices, but that the political atmosphere has caused many people to become worried about the future, and this in turn has caused them to think that in order to feel safe, they need to buy foreign currency and keep this money at home as assurance.”

Jahangiri continued with “Certain extremist in the USA and the west, along with dissenters and some of the nations in the region are actively trying to damage us”.

The Iranian Parliament has begun to question the regime’s handling of economic policy.

MP, Jabar Kochakinejad, stated: “80 percent of the foreign exchange market is in the hands of the government, and so with the currency that they have, the government should be able to control the market, the question here is why then is there such turmoil happening in the market”.

On Sunday April 15th, 63 parliamentary representatives requested the removal of Valiollah Seif, the Governor of Iran’s Central Bank. The Chairman of the Economic and Financial Committee said that they do not have any “detailed information” on the government’s plans to manage the foreign exchange market and that the “key decision” would be made at the “Presidential level”. In other words, Sief is irrelevant to Iran’s economic decision making.

However, a number of hardliners asked for his resignation, including Amir Khojaste the representative of the Hamedan province, who prevented Seif from speaking in a recent parliamentary session. The representative told News Online that “We said [to Seif] you should go, why are you here? How is it that the price of the dollar has reached this price in the market, and you are not showing any reaction? The parliamentary members are under pressure from the people. The people are saying what parliament is this that cannot do anything, that cannot use its powers and deal with this disarray in the foreign exchange market”.

Professor Steve Hank of John Hopkins University in Maryland, USA, has said “the Iranian Rial has plummeted and inflation has increased to 66% per year”.

COFACE, an important entity for assessing and estimating risk and security for global trade, released its country and sector risks report for the first quarter of 2018.

According to a report by Radio France “This group marks the countries at the greatest risk for investment and trade, and in them, the probability of not receiving a return on the investments made by each partner is extremely high”.

Sigal Mandelker, the U.S. Undersecretary of the Treasury for Terrorism and Financial Intelligence, has said that there are risks to trading with Iran, because the Iranians have not reformed their government. Mandelker, speaking in London, went on to add that Iran uses money to support Hezbollah, Hamas and President Bashar Assad; and that there is no transparency in Iran’s financial dealings.

On April 11th the United States’ Secretary of the Treasury, at a congress hearing, reported of further sanctions to be imposed on Iran, a move that would continue to destabilize the Iranian economy.  According to Mr. Mnuchin this would involve primary and secondary sanctions against Iran and its trading partners. He also told reporters that in addition to the new sanctions, the fact of the USA pulling out of the Nuclear Deal would mean the return of the previous sanctions against Iran”.

This news is already enough to prevent investment in Iran. Under such conditions, no company would be willing to make an investment in Iran and no bank would be willing to guarantee the investment.

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