Iran allows sales of foreign currency at floating rates in face of U.S. tariffs

Iran is continuing its efforts to decrease the damage that U.S. sanctions will probably cause in their economy, and to their currency more specifically. Its government is considering to ease foreign exchange rules, given the fact that sanctions are likely to be applied as soon as this week.

The country’s rial has been spiraling down since the U.S. pulled out of the Iran nuclear deal, now being at half the value that it was in April when the measure was announced. This caused for discomfort among the Iranian people, which they demonstrated in public protests that denounced corruption and bad handling of the country’s funds.

Iran’s Central Bank has stated that “enemies” of the country are to blame for this latest development, and several individuals have been arrested due to possible involvement in the economic downfall.  President Hassan Rouhani has also created a project with parliament members to sell foreign currency at floating or variable rates. The administration had previously agreed on a legislation that would only allow for Iran to sell at a rate of 42,000 rials to the dollar.

Immediately after the announcement of new legislation, the rial gained a bit of value in the market. The bank’s governor reacted positively to this development and used the opportunity to calm the Iranian people, as he went to an interview where he stated:

“This shows our power. The same day you (Americans) impose sanctions we open our economy. We have no problems, so why should our people worry? … The central bank will try not to interfere in setting the price of hard currencies, which will be determined by supply and demand, however, the bank’s supervision will prevent unbridled (market swings) and the creation of a black market.”

In an attempt to boost the amount of cash present in the economy, the Bank will now allow for regular citizens to open dollar-based savings accounts. It is unclear whether this plan will actually create enough cash to make up for the high demand of dollars from the Iranian people.

U.S. Secretary of State Mike Pompeo released a statement mentioning that the White House will today specify how and where the tariffs will be implemented.

Featured image via President of Russia

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