Why Iran's Rial Hit an All-Time-Low Against the US Dollar
Today $1 costs 100 thousand Iranian rials, that is an all-time-low rate against dollar. Although several reasons for the slide have been put forward by economists – amongst them the strength of the dollar against other currencies in the last few weeks, and the uncertainty before Iran’s presidential elections next year – many suggest the main reason is the election of Donald Trump in November.
“Amongst external factors, there is the rise of interest rate in the United States which has added to the value of the dollar in global markets including in Iran,” explains euronews journalist Hossein Alavi. “The other factor is the election of Donald Trump as the future US president which has cast doubts over the nuclear deal with Iran. As far as the internal factors are concerned, there has been an increase in demand for dollars from people travelling and traders .”
In the last 10 years, Iran has seen the value of the rial drop from 9,200 to $1 to 41,600 to $1, a depreciation of some 450 percent. Much of that collapse came in 2012 over the country’s contested nuclear program, when the U.S. banned the world’s banks from taking part in Iran’s oil economy and the European Union imposed an oil embargo.
Under the 2015 nuclear deal between Iran and world powers, international sanctions against the country were lifted in exchange for it limiting its enrichment of uranium. Since then, Iran has rushed to increase oil production to regain its lost market share while simultaneously signing deals worth tens of billions of dollars with airplane manufacturers Airbus and Boeing Co.
But the rial, initially buoyed by the accord, has now fallen. The official unemployment rate has risen to 12.7 percent this year from 10.6 percent in 2014, while youth unemployment has reached 27 percent.
Despite this situation, experts suggest certain industries are poised to benefit from the current market dynamics as the depreciation of the rial will make Iranian exports more attractive to the world market.