Iran not worried over rial’s free fall

DUBAI - Reuters

AFP photo

Iran has been able to cope with Western economic sanctions and the central bank has supplied enough hard currency to finance imports even though the sanctions have cut Tehran’s oil earnings, President Mahmoud Ahmadinejad said yesterday.

He was speaking after the Iranian rial plunged to a record low against the U.S. dollar earlier in the day. It has lost about a third of its value in the past week, as panicking Iranians have scrambled to change their rial savings into hard currency to escape high inflation and further depreciation.

Iran’s imports totalled $26 billion in the first half of this year, down only moderately from $29 billion in the same period last year, Ahmadinejad told a news conference.

“The central bank has provided all the currency for these imports,” he said. He said the country’s enemies were waging a “psychological war” against it, adding: “Enemies have managed to reduce our oil sales but hopefully we will compensate for this.”

Many businessmen and ordinary citizens in Iran blame the government for the currency crisis, and Ahmadinejad has been criticised for it by political enemies in parliament.

The rial has been depreciating for over a year and has lost about two-thirds of its value since June 2011. Its losses have accelerated in the past week after the government launched an “exchange centre” to supply dollars to importers of some basic goods; businessmen have complained the centre has failed to meet demand for dollars.

Ahmadinejad defended his economic record yesterday, saying a phase-out of food and fuel subsidies that he launched in 2010, which has boosted the official inflation rate to around 25 percent, had been successful.

 “What is the subsidy reform? We are taking from the pockets of those who consume more to give to those who consume less,” he said.