Iranian rial tumbles as US sanctions loom

Bloomberg

Iran’s rial tumbled to another historic low, resisting government efforts to shore up the economy as the restoration of US sanctions looms.
In an effort to signal they’re taking action to fight profiteering and cushion the blow of the US economic offensive, authorities have rounded up more than two dozen merchants who they say exploited government currency measures for personal gain.
Iran’s national currency, whose yearlong depreciation has gained momentum in recent weeks, set a new low this week against the dollar, trading on average at 112,000 rials on the black market on Monday, the Iranian Labour News Agency (ILNA) reported, from around 90,000.
The rial has also weakened against the euro.
Many Iranians are fearful that their economy, already shaky from years of sanctions, mismanagement and corruption, will collapse following President Donald Trump’s decision in May to withdraw from the international nuclear deal with Iran and reimpose an embargo on Iran’s energy and financial sectors.
Their expectation that life will only grow tougher has created growing discontent with Iran’s leaders that has boiled over into sporadic protests.
Looking to minimise the impact of the sanctions, due to resume beginning on August 6, authorities imposed restrictions on foreign-currency transactions and unified the
official and unregulated exchange rates in an effort to shut down a flourishing black market that’s fed the slump in the rial’s value.
But rather than choking off the illegal transactions, the introduction of a fixed rate allegedly has encouraged some traders to profiteer by charging higher black market prices for goods imported with dollars bought at the lower official rate of about 44,050 rials.
“These abnormal fluctuations on the currency markets are not proportionate with the economic realities and the country’s foreign currency capabilities,” the central bank said in a report on Monday, saying agitations on the currency markets were a result “of plots by the nation’s enemies to create unrest in the economy.”
The government appointed a new central bank governor to replace Valiollah Seif who had been criticised by President Hassan Rouhani’s political
rivals for failing to avert the rial’s fall.
Security forces dispersed black-market currency dealers from Tehran’s Manouchehri and Ferdowsi streets — the epicenter of the illicit currency trade, according to ILNA. More traders were looking to buy dollars than sell them, signaling a stronger greenback in local markets, the report said.
Iranian authorities investigating possible profiteering in car and mobile-phone imports have also stepped up their arrests.