Last updated: 2 October, 2012

Iran currency “slides further”

Iran’s rial was fetching wildly different rates in confused market conditions on Tuesday, after a dramatic fall the day before and amid calls by officials for government intervention.

The ISNA news agency said the currency was being sold for between 36,000 and 39,000 to the dollar in Tehran’s money-changing district — a decline of four to 12 percent over Monday’s close.

But online exchange tracking websites showed the rial had either strengthened or was close to Monday’s closing rate of 34,700.

The varying reported values followed a startling plunge of 17 percent on Monday that the United States seized on as proof that Western sanctions over Iran’s disputed nuclear programme were working.

Iran’s currency is around 80 percent weaker than its value of a year ago, before the sanctions were announced.

Iranian officials say sanctions are having an effect on the economy, but some laid the blame of the rial’s fall on alleged economic mismanagement by President Mahmoud Ahmadinejad.

Commerce Minister Mehdi Ghazanfari, in an interview with state radio, said “the foreign exchange rate in the market is not only an economy issue… security, political and cultural issues are also involved in the forex rate rise and unfortunately the relevant authorities are not sufficiently active.”

The chairman of Tehran’s chamber of commerce, Yahya Ale-Eshagh, was quoted as saying by the Mehr news agency that “part of this tumult is due to sanctions,” adding that it was part of an economic “war” the West was waging on Iran.

But he also said “the person who is not able to manage in a time of crisis should not continue working in his post.”

Last week, Ahmadinejad hinted during a trip to New York for the UN General Assembly that Iran could countenance direct negotiations with the United States on the issue of its nuclear programme.

But Mehdi Mohammadi, a figure close to Iran’s Supreme National Security Council, wrote in a piece for the Vatan Emrouz newspaper on Tuesday that such talks were not welcome.

“Is the currency situation in the market due to sanctions? No… The problem is not a lack of (foreign) currency,” he wrote.

“The problem comes from 1) management by the executive, which is the main supplier of currency on the market… 2) the mafia or mafias that profit from getting currency at a cheap rate and 3) a psychological climate being created so that people who never before saw a dollar are pushed to believe they need to sell everything to buy dollars.”

He added that suggesting readiness to hold talks with the United States was not an option.

“Past experience shows that speaking of negotiations in these conditions only sends a signal of weakness. The enemy only makes concessions and takes you serious when you’re strong,” he wrote.