Iran on Saturday authorized the central bank to intervene in the foreign exchange market in defense of the rial, state television reported, after the currency fell to repeated record lows in recent weeks following the reimposition of US sanctions.
The rial has slumped due to a weak economy, difficulties at local banks and heavy demand for dollars among Iranians who fear Washington’s withdrawal from a landmark 2015 nuclear deal and renewed US sanctions could shrink Iran’s oil exports and derail its economy.
A set of US sanctions targeting Iran’s oil industry is due to take effect in November. President Hassan Rouhani has called the sanctions an “economic war” against Iran.
A top government body, headed by Rouhani and the heads of parliament and the judiciary, “gave the central bank governor the necessary authority to intervene in the foreign exchange market and to manage it”, state TV said.
“The central bank will intervene in the foreign exchange market through banks and authorized exchange shops and carry out the necessary measures to control the exchange rate of hard currencies,” the television quoted the body as saying, Reuters reported.
The Iranian rial hit a record low on the unofficial market on Wednesday and was offered for 186,000 rials to the dollar according to foreign exchange websites. The rial has lost approximately 75 percent of its value so far this year.
The official exchange rate is 42,000 rials per dollar and is used mostly for imports of state-subsidized basic goods such as food and medicine.
Officials have said Iran was moving to ease regulations on imports of hard currency bills and gold by exchange shops, after Washington in August re-imposed sanctions on Iran’s purchases of dollars, its trade in gold and precious metals, and its dealings with metals, coal and some software.
