Iran’s currency, the rial, experienced a steep devaluation over the last week, forcing the country into a crisis, reports BBC. On April 9, the Iranian rial hit an all-time low – with the exchange rate trading at 60,000 rials for 1 U.S. dollar on the open market. This extreme devaluation forced the Iranian government to intervene and impose a single foreign exchange rate across the country in an effort to rescue the currency from a further slide.
Regarding the exchange rate, Iranian Vice President Eshaq Jahangiri stated in a broadcast speech following an emergency cabinet meeting, “We will not recognize any other exchange rate in the market. To us foreign currency sold at any other price would be illegal.”
The government hopes that its standard 42,000-rial exchange rate, up from its previous official rate of 37,000-rial, will halt the depreciation and ease concerns over a possible currency crisis. The looming potential for crisis has induced panic-buying of scarce dollars, according to The Guardian.
Concurrently, the government faces the issue of combatting unregistered and illegal currency traders. Al Jazeera reports that these illicit traders exchange U.S. dollars and euros for rials at free market rates, which are higher than the static 42,000 rate set by the government and undermine the administration’s effort to stabilize the currency in the face of further devaluation.
Over the past 15 years, the rial has been steadily losing value against the U.S. dollar, with occasional sharp decreases resulting from various economic and political issues. According to the Guardian, this devaluation has been attributed to a number of economic and political factors. The political factors include speculation regarding a collapse of the Iranian nuclear deal and a return to increased sanctions on the nation, which would hurt the oil-exporting nation.