Rial continues recovery after recent collapse
TEHRAN, Feb 3 (AFP) - The Iranian rial continued to recover ground against
major currencies on the illegal open-exchange market Monday following
its recent collapse to record lows.
Iran's currency was trading at around 7,800 rials to the dollar on Monday
afternoon, up from 8,100 last Wednesday and a record low of 8,750 the
day before.
The rial changed hands at 7,500 to the dollar some 10 days ago.
Dealers attributed the recovery to "market conditions" and
recent official remarks blaming psychological rather than economic factors
for the dramatic fall.
Mohammad Ali Najafi, head of the state Plan and Budget Organisation,
said Sunday the currency's freefall was a result of "the psychological
impact of parliamentary debates on the budget" for the coming financial
year.
Late last month MPs approved an austerity package of spending cuts and
tax increases to tackle the mounting economic crisis after two weeks of
often stormy debate.
Najafi also attributed the rial's fall to increased demand for foreign
currency from people travelling abroad for the Iranian new year on March
21.
The currency's slide has continued relentlessly for several months --
late last year the rial crashed through the 6,000 and 7,000 thresholds
against the dollar within weeks.
Iran is currently facing a foreign exchange crunch prompted by plummetting
prices on world markets for Iran's main export, oil.
The government banned the open exchange market four years ago in an
effort to prevent the collapse of the rial against major foreign currencies.
The government maintains three official exchange rates of 1,750, 3,000
and 5,700 rials to the dollar -- for state transactions, licensed exporters
and some travellers authorised to receive hard currency, respectively.
But the English-language Tehran Times on Monday urged the government
to scrap the different rates in favour of a unified exchange rate.
"A single rate will help wipe out the black market and cure the
nation's ailing economy as well," the paper quoted "experts"
as saying.
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