Continued Fall of National Currency: Dollar Surpasses 11,000 Tomans, Gold Coin Exceeds 4 Million Tomans

Domestic media outlets used the headline “The Dollar Became Five-Digit.” A headline to describe the moment-by-moment and unbridled increase in the dollar’s price in Iran’s foreign exchange market. The increase in the official dollar rate also failed to reduce the turmoil in the foreign exchange market.

The Iran Students News Agency “ISNA” on Sunday, Mordad 7 (July 29), chose the headline “Dollar Became 5-Digit” for its report. A phenomenon that reflects the inability of the Central Bank and officials and advisors of the Rouhani government to control the price of foreign currency in Iran’s market.

ISNA, noting that world financial markets are closed on Sunday, asks why and for what reason the price of the dollar in the domestic foreign exchange market increases every day?

The price of the dollar has tripled within a year. In Shahrivar of 1396, each dollar traded for approximately 3,800 tomans. A year later, the dollar’s price crossed the 10,000-toman mark.

Previously, amid the turmoil in the foreign exchange market, the price of the dollar had crossed the 10,000-toman barrier. However, at that time, buying and selling dollars at a price higher than 10,000 tomans was an accidental phenomenon.

There was a shortage of foreign currency, and those who needed currency were willing to accept such figures to purchase it. But now, for the first time in the free market, the dollar’s price becomes five-digit.

To compare the increase in the dollar’s price over the past year, it may not be coincidental that the ISNA correspondent used Shahrivar 1396 as the basis for measurement.

In Shahrivar of 1396, the Central Bank, at the request and order of the government, reduced the bank interest rate from 25 percent to 15 percent. This very issue led to an unprecedented exodus of deposits from banks and directed people’s money toward the gold and currency markets.

Ineffective Monetary Policy

After the dollar’s price crossed the 6,000-toman mark, the Rouhani government intervened in the foreign exchange market and set a uniform rate for the dollar. Rouhani’s Deputy, Eshaq Jahangiri, even threatened that anyone who sells dollars at a price higher than 4,200 tomans commits a crime.

ISNA further reminds in its report that experts evaluated the government’s currency policy as a failed and fruitless policy from the very beginning.

ISNA wrote in this regard:

“Currency market experts and analysts believed that once the Central Bank banned other money changers from dollar transactions and did not recognize the foreign exchange market as legitimate and secure, it could soon intensify currency inflation in conditions where transactions are conducted non-transparently and underground. Of course, that is exactly what happened, and over time the currency market experienced greater fluctuations and prices moved upward.”

Experts had requested that the government reconsider its single-rate currency policy and the 4,200-toman determination for each dollar. The government’s reconsideration 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.

Gold Coin Price Surpasses 4 Million Tomans

Ebrahim Mohammadvali, head of the Association of Gold and Jewelry Sellers, also informed the Iran Students News Agency “ISNA” of an unprecedented increase in gold coin prices in Iran’s market.

According to the statement of the head of the Association of Gold and Jewelry Sellers, the price of the new design coin has crossed the 4-million-toman barrier. In this way, the price of the coin experienced a 13 percent growth in just one day.

It should be noted that the price of the full gold coin with the new design on Sunday, Mordad 7, increased by 400,000 tomans compared to the previous day.

According to Mohammadvali, the reason for the increase in gold coin prices in Iran’s market should be sought domestically, and the increase in coin prices is unrelated to fluctuations in its price in the global market.

Source: DW