I am of Iran. She is me. My Fatherland. Ancient love beyond time & place.
by all credible accounts. The controlled rate is hovering around 10000-11000 and even this on a never ending downtrend even during the past 10 years or so (minus the financial crisis period where dollar is safe haven still) when dollar has declined against all major currencies. Once at full float maintaining the trade balance and the domestic costs of fixed expenditures will explode first before the economy and population does. This costs that are essentially politically and ideologically motivated and have little relevance to real economics were forecast to explode around 2011-12 based on the trajectory of events with a significant component being oil as it is 80% of the economy (the same that inflates all Iran's numbers including PPP because of the ever ascending oil price minus occasional blips). There is no reason to believe that timeline will change significantly. The only thing that can delay or stop that is an astronomical rise in price of oil and hence influx of liquidity. This is also part of the reason IRR has taken a belligerent stance that on the surface makes no political or common sense. U.S. on the other hand is doing all it can to keep the oil prices low for several reasons but is internally conflicted because of oil interests and a significant portion of that market now under Chinese and Russian influence. Both allies of IRR because they know this regime will give away anything to maintain the 2 key allies, or else. This is in addition to the Russians selling their outdated and outmoded nuclear junk, along the plotting of rearranging the Oil/Gas map of the region and taking even more of Caspian sea control and reserves (never mind that everyone minus Iran is now benefiting from Gas reserves as well as Oil (google related items and sites). China, in addition to getting cheap oil and dumping its junk in Iran, along with several others including Korea & Japan are beneficiaries of expanded export markets because the Import centric policy essentially favors imports over domestic production. One would think this is non-sensical even for IRR. But this import driven approach, keeps partners happy and in-leverage and simultaneously allows for increasing control of Sepah and their allies in bazar to take full ownership of the economy. This jives with the reported take over of projects as foreign firms leave due to embargo. The claims and boasts of IRR aside, they won't be able to cover the technological vacuum as they have not been able to before, or even the investment flow. Meanwhile, as I mentioned in an earlier comment, the Oil production capacity is not about to go up, there is no meaningful gas exploration to speak of, and the nation's industrial base is paralyzed or mal-nourished and will be further so as the hyper-inflationary forces kick in, while exorbitant fixed costs can't be done away without a massive backlash. That is called stuck between a rock a hard place. Mousavi/khatami et al with all their flaws were quasi-technocrats and to the extent that any government can be accounting based within the islamic republic context, they were. Now, this is AN/Sepah ala Kim Il Jung with a religious erteja' mixed in where sanity, logic and normalcy are all western and imperialist, and hence, evil. The Western masters that unleashed this beast on Iran, have decided the expiration time has come but are too thinly spread to engage another war. At least yet. And there is nothing more dangerous than a cornered beast. IRR calculation is simple. It is now or never and here or nowhere. So, the more radical and fearsome, the better. Everything else is secondary. The normal rules of human conduct no longer apply. Let alone statistics and information. I had mentioned this in a blog a while ago but defeating IRR is a key step in countering global fascism & extreme capital. And the Iranian people, perhaps as a matter of destiny, are at the front line of this war. What IRR has accomplished in the past 31 years is bring Iran ever closer to abyss. Culturally, financially, morally, politically and now militarily. And our enemy is not just IRR but the whole criminal enterprise that ushered them in. This leach was designed to suck our blood and it has been the most sophisticated and successful creation of the imperialism so far. Yes the same imperialism that is IRR's battle cry.
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ari
by Niloufar Parsi on Tue May 11, 2010 04:26 AM PDTgood question. but iranian inflation is down to single digits at the moment. the relation between inflation and currency value is obviously not so clear. at a fundamental level, for as long as the overall size (value) of an economy is not shrinking, the value of its currency should hold.
but as we know no such 'free trade' really exists. look how the chinese, europeans and americans have regularly intervened in the past 2 years to maintain their currency value regardless of local inflation rates. in fact, deflation may be even worse for a currency, per the cases of yen and dollar last year. as the us economy shrank so did the value of the dollar.
iran's economy is continuing to grow in real terms (inflation-adjusted, and at around 5% a year for the past decade, though this is lower at around 3% right now), so there is no reason for her currency to lose value.
When expats worry about rial! lol
by I Have a Crush on Alex Trebek on Tue May 11, 2010 04:25 AM PDTyou are living your life elsewhere and you have to stick the choob to them too. jesus christ! we expats are something else. rial and toman. get a life mr. economics.
Anti-Iran propaganda sounds so desperate
by amgw4 on Tue May 11, 2010 03:57 AM PDTIt's like someone is sitting in his basement grasping at any laughable headline. First of all you can't measure an economy by the value of the currency. For example, the US right now wants China to raise the value of its currency (and correspondingly devalue the dollar) to help the US economy. As anyone who actually visits cities like New York and Tehran knows, Iran's economy is doing fine and many Iranians are moving back to escape the Western depression.
Even more importantly, this "article" is so poorly written that it again highlights Iranian.com's terrible editorial standards. If you want to take the name "Iranian.com" don't embarrass us.
Any Economist in the house?
by Real McCoy on Tue May 11, 2010 03:19 AM PDTThis particular subject cannot be played out by some cut-and-paste from Wikipedia®, by a bunch of uneducated pros, and cons. Economics is not about nonsensical rhetoric, and slogans.
This valuable blog definitely deserve a "technical" round of discussion, which is apparently beyond the ability of the two hezbollahi characters, below.
Many of us remember, one $US, for six tomans, or so; until some people whose Messiah resides inside a deep well, saw a face on the Moon.
I'm also puzzled by the low Rial to Dollar
by Ari Siletz on Tue May 11, 2010 03:25 AM PDTthe relative value of the Rial is important how?
by Q on Tue May 11, 2010 02:01 AM PDTThere are currencies lower and higher, so what?
The country went through a freakin' revolution, the Western-run financial sector was displaced by a native one. The currency name itself should have changed so that it's clear there is no connection to Shah's economy, but it wasn't, a big mistake in my opinion.
Once again, I have to observe Oktaby, you show less than average understanding in economic matters. First was your flawed use of p/c Nominal GDP for comparison (where Iran beats China!) and now this.
Hey Chicken Little, the sky
by Sargord Pirouz on Tue May 11, 2010 12:38 AM PDTHey Chicken Little, the sky is not falling.
My advice for you? Learn how to use paragraphs. Your writing is one large blob, just like your anti-Iran mentality.