The national currency continues to fall: The dollar exceeds 11,000 tomans, gold coins exceed 4 million tomans.
The headline “The dollar has reached five digits” was used by the domestic media to describe the moment-by-moment and unbridled increase in the dollar’s price in the Iranian currency market. The increase in the official dollar rate also failed to reduce the volatility in the currency market.
On Sunday, July 29, the Iranian student news agency ISNA chose the title “The Dollar Has Become a Five-Digit Currency” for its report, a phenomenon that indicates the inability of the Central Bank and officials and advisors of the Rouhani government to control the price of the currency in the Iranian market.
ISNA, noting that global financial markets are closed on Sunday, asks why and for what reason the dollar price in the domestic currency market increases every day?
The dollar has tripled in value in a year. In September 2017, each dollar was trading at around 3,800 tomans. A year later, the dollar's value crossed the 10,000 toman mark.
Previously, in the shadow of the turmoil prevailing in the foreign exchange market, the dollar's price had crossed the 10,000 toman mark. But at that time, buying and selling dollars at a price of more than 10,000 tomans was a random phenomenon.
There was a shortage of foreign exchange, and those who needed it were willing to accept such a sum to buy it. But now, for the first time, the dollar's price in the open market is reaching five figures.
To compare the increase in the dollar's value over the past year, it is perhaps no coincidence that the ISNA reporter used September 2017 as the basis for the measurement.
In September 2017, the Central Bank, at the request and order of the government, reduced the bank interest rate from 25 percent to 15 percent. This led to an unprecedented outflow of deposits from banks and the flow of people's money into the gold and foreign exchange markets.
Ineffective monetary policy
After the dollar's price exceeded 6,000 tomans, the Rouhani government intervened in the currency market and set a flat rate for the dollar. Rouhani's deputy, Eshaq Jahangiri, even threatened that anyone who sold the dollar for more than 4,200 tomans was committing a crime.
ISNA continues its report by noting that experts had considered the government's foreign exchange policy to be a failed and ineffective policy from the very beginning.
ISNA wrote the following in this regard:
"Foreign exchange market experts and analysts believed that the fact that the Central Bank has banned other exchanges from dollar transactions and does not recognize the foreign exchange market as secure and recognized, could soon exacerbate currency tensions in a situation where non-transparent and underground transactions are carried out. Of course, that is what happened, and over time the foreign exchange market became more volatile and prices went up."
Experts had called on the government to reconsider the policy of fixing the currency at a single rate of 4,200 tomans per dollar. The government's revision resulted in a 200 toman increase in the official rate, but the difference between the rate set by the Central Bank and the free market rate increased day by day.
The price of the coin exceeded 4 million tomans.
Ebrahim Mohammadvali, head of the Gold and Jewelry Sellers Union, also announced in an interview with the Iranian student news agency ISNA about the unprecedented increase in the price of coins in the Iranian market.
According to the head of the Gold and Jewelry Sellers Union, the price of the new design coin has crossed the 4 million Toman mark. Thus, the price of the coin has increased by 13 percent in just one day.
It should be noted that the price of a whole coin with the new design on Sunday, August 27, increased by 400,000 tomans compared to the previous day.
According to Mohammad Vali, the reason for the increase in the price of coins in the Iranian market should be sought domestically, and the increase in the price of coins has nothing to do with fluctuations in its price in the global market.
Source: DW
