Disaster at Istanbul Crossroads
What Did Raisi Do with the National Currency?
According to Iran Gate, the fluctuations in the exchange rate during more than 18 months of Ebrahim Raisi’s presidency have been so severe that the thirteenth president has set the record for the weakest performance among all presidents in the currency market.
The Rial has never experienced such conditions under any government. In fact, no government’s performance in the first 18 months has caused such a heavy and unprecedented decline in the value of the national currency against foreign currencies.
When Ebrahim Raisi took over the government from Hassan Rouhani in the summer of 2021, the dollar rate in the free market was around 24,000 tomans. However, with the beginning of December 2022, the price of the US dollar entered the 37,000 toman range, marking a historic record.
In other words, Ebrahim Raisi has lost more than half of the national currency’s value in just 18 months. More precise calculations indicate a reduction of over 55% in the value of the Rial against each US dollar. Meanwhile, no government has recorded such a worrying record in 18 months.
Market Manipulation Was Also Ineffective
Government intervention in the currency market is a tradition that has been accepted and considered normal in past periods. This tradition was even present in pre-revolution governments and is not a novel issue. However, what we are witnessing these days is a disaster unfolding in the currency market despite extensive interventions by the Central Bank, the judiciary, and the police.
In other words, considering his background, Ebrahim Raisi has created a security atmosphere in the currency market. Although these actions, alongside widespread currency injection into the market, could not alleviate the numerous issues facing the Rial, the arrests and crackdowns in the currency market were also ineffective, and the upward trend of the dollar price in the free market continued.
Market Control Through Price Censorship
Evidence suggests a difference of about a thousand tomans between the free market price and the official rates announced for the dollar. Some observations also indicate pressure on domestic media to publish rates lower than the actual dollar price. News available to Iran Gate shows that the government and the Central Bank are trying to create confusion among market participants by publishing unrealistic prices.
Although the results of these actions are completely evident when looking at the currency price boards at Ferdowsi Square and Istanbul Crossroads, it seems the thirteenth government and the Central Bank under Saleh Abadi know no other way but to intervene in the market. Meanwhile, economists unanimously agree on the destructive nature of such an approach within the country’s economy.
Nothing Else Was Expected from Saleh Abadi
The duty of central banks worldwide is to preserve the national currency’s value. What threatens the value of any country’s national currency is the phenomenon of inflation, which acts like an incurable cancer for any economy. Therefore, the Central Bank’s main duty is defined as preserving and protecting the national currency’s value, and it tries to control inflation as much as possible.
However, in Iran, the Central Bank has been unable to carry out this obvious duty, and chronic inflation has gripped Iran’s economy, intertwining citizens’ lives with heavy double-digit inflation for more than the past five decades.
Since the day Ali Saleh Abadi took over as the head of the Central Bank, the situation has not only failed to improve but has turned this institution into a megaphone for the government, a government to which Saleh Abadi considers himself indebted. The Central Bank is seen as a lever for artificially controlling the exchange rate and price-making. This approach will not only lead nowhere but has worsened the situation.
In fact, instead of taking steps to control inflation, the government and the Central Bank are trying to compress price springs by injecting dollars into the currency market. Meanwhile, the country is in urgent need of cash reserves and is facing shortages. However, with such actions, the government is essentially wasting capital, which ultimately has no clear or positive impact on people’s lives.
For this reason, economists believe that the current management team at the Central Bank lacks the ability to take fundamental and foundational actions. This is why it is said that controlling inflation is neither something Ali Saleh Abadi and his associates can achieve nor a strategy the government is inclined to implement. In other words, until an independent individual takes charge of the Central Bank, the situation will remain unchanged, and Ali Saleh Abadi is a prime example of this.
- The Future of Iran in the Fog of Uncertainty
- No Hope for the Future of Iran’s Economy: Part One
- Daily Record-Breaking of the Dollar Rate
- When Will the Dollar Reach 40,000 Tomans?
