DUBAI, (Reuters) – The Iranian rial plunged more than 7 percent in open-market trade today to a record low against the U.S. dollar, traders and currency-tracking websites said, meaning the currency has lost about a quarter of its value in the past week.
The rial traded at 32,250 per dollar on Monday, compared to about 29,720 on Sunday, currency-tracking website Mazanex said; an Iranian foreign exchange trader in Dubai confirmed the drop. The currency was trading at 24,600 last Monday, according to currency-tracking site Mesghal.
The freefall suggests Western economic sanctions against Iran, imposed over its disputed nuclear programme, are doing increasingly severe damage to the economy and that the country’s reserves of hard currency may be running dangerously low.
On Sunday, Israeli Finance Minister Yuval Steinitz said Iran’s economy was “on the verge of collapse” and estimated the government had lost $45-50 billion in oil revenue as a result of the sanctions, which have slashed Iran’s oil exports and largely frozen it out of the international banking system.
The rial’s losses accelerated in the past week after the government launched an “exchange centre” designed to supply dollars to importers of some basic goods at a special rate slightly cheaper than the market rate.
Instead of allaying fears about the availability of dollars, the centre appears to have worsened the currency turmoil by linking the special rate to the market rate, meaning that even the privileged importers will face sharply higher costs as the rial slides.
