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News & Views Iranian currency freefalls on open market TEHRAN, Oct 28 (AFP) - The Iranian currency dropped sharply in value this week on the open market after months of steady decline, but the central bank pledged Wednesday to maintain a freeze on the rate of the rial against major foreign currencies. The rial fell from 6,200 to the dollar at the start of the week to nearly 6,700 on Wednesday after hints from the central bank early in the week that it may allow the currency to freely float against major currencies. Central Bank deputy-governor Mohammad-Jafar Mojarrad said Monday that Iran's fixed exchange rate regime "was no longer effective." Iran froze the rate of the rial at 3,000 to the dollar three years ago in an effort to stablize the national currency, which had then collapsed to around 7,000 to the greenback. The authorities, adopting a range of tough measures including banning the open market and prosecuting illegal money changers, managed to boost the rial, only to see it gradually fall again in value. The central bank presently maintains three different exchange rates of 1,750, 3,000 and 5,700 -- for government organisations, export rates and certain travellers respectively. But the country's banking system is not allowed to engage in any direct exchange of currencies at the above rates. The central bank said Wednesday the rates will continue to be frozen until the end of March 2000, in line with the government's latest economic policies unveiled several months ago. Iran's revenues in hard currency have sharply declined because of the collapse of oil prices, and the government is facing a budget shorfall of 6.3 billion dollars this year. It has sought to make up for lost income by more tax collection, sale of debentures, and preselling crude. Links * Iran News
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