Last updated: 3 January, 2012

Iran currency recovers from sharp drop

Iran’s currency, the rial, rebounded strongly on Tuesday as the central bank stepped in to shore it up a day after it suffered a sudden 12-percent drop, media reported.

The rial climbed nine percent on the open market to close trading at 16,200 to the dollar.

That was most of the ground it lost Monday, when it ended up plummeting to 17,800 to the greenback — a record low.

Iranian Commerce Minister Mehdi Ghazanfari was quoted by IRNA as saying the central bank had been asked “to inject more foreign currency into the market, and the central bank has promised to do so.”

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

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

While the slide started immediately after US President Barack Obama signed into law new sanctions targeting Iran’s central bank, Iranian officials said that was not the cause.

“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.

Foreign ministry spokesman Ramin Mehmanparast told reporters the currency volatility “definitely has nothing to with sanctions.”

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

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 percent 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.