Iran’s rial falls to record low upon US sanctions

TEHRAN - Reuters

An Iranian man walks past a currency exchange shop in northern Tehran yesterday. REUTERS photo

The Iranian rial fell to a record low against the dollar yesterday following U.S. President Barack Obama’s signing of a bill on imposing fresh sanctions against the country’s central bank.

The new sanctions could hamper the world’s major oil producer’s ability to sell oil on international markets.

The exchange rate hovered at 17,200 rials to the dollar, marking a record low. The currency was trading at about 10,500 rials to the U.S. dollar last month.

Some exchange offices in Tehran, when contacted by Reuters, said there was no trading taking place until further notice.

“The rate is changing every second ... we are not taking in any rials to change to dollar or any other foreign currency,” said Hamid Bakhshi from Tehran.

Imposing sanctions on Iran’s central bank would tighten the screw and make it more difficult for the world’s fifth biggest oil exporter to receive payments for exports - particularly oil, a vital source of hard currency for Iran.

Sharp rial fluctuations are linked to the foreign sanctions imposed on Iran since 2006 over its disputed nuclear program, coupled with high inflation and concerns over a potential military strike by the United States or Israel.

Some analysts suggest that the government is making profit out of the souring price of dollar but the currency drop has created concerns among ordinary Iranians.

Iran’s economy is 60 percent reliant on petrodollars and any sanctions imposed on its oil income will put further pressure on the ailing economy.