Daily Israel Report

Iranian Currency Dives, Ahmadinejad in Hot Water

Ahmadinejad faces parliamentary questioning as sanctions help sink the “rial” currency by 20 percent in two days. Iranians running scared.
By Tzvi Ben Gedalyahu
First Publish: 10/2/2012, 3:10 PM

Rial loses 20 percent value in two days
Rial loses 20 percent value in two days
AFP photo

Iranian President Mahmoud Ahmadinejad faces parliamentary questioning as Western sanctions help sink the “rial” currency by 20 percent in two days and Iranians run scared.

The rial took a nosedive of 2-to-6 percent Tuesday following a dizzying 17 percent fall on Sunday in the wake of the threat of even tougher sanctions by the United States and Western allies.

An almost certain sigh that the Iranian government is afraid of an economic catastrophe, which is exactly President Barack Obama’s game plan against the threat of a nuclear-armed Iran, is the government-controlled media ignoring the fall of the rial.

The local currency has los more that 80 percent of its value in a year.

One Iranian legislator said he has collected enough signatures to force questioning of Ahmadinejad, who also was under the parliamentary gun earlier this year for his public feud with the country’s highest ranking leader, Ayatollah Ali Khamenei.

Ordinary Iranians are increasingly struggling with the resulting inflation, which was officially put at 23 percent even before the latest plunge of the rial.

"Prices are rising every day and it just doesn't stop," said Khosro, a retiree who gave AFP only his first name. He said he was forced to work as a taxi driver to boost his diminishing pension.

The rial was quoted by currency traders at 34,500 to a dollar on Tuesday, compared with 29,500 on Sunday.

However, traders in Tehran's money-changing district said they were selling one dollar for 37,000 rials -- a six percent decline over Monday's close.

The Obama administration expressed pleasure over the nosedive in the rial.

"From our perspective this speaks to the unrelenting and increasingly successful international pressure that we are all bringing to bear on the Iranian economy. It's under incredible strain," a top State Department official said.

Visitors to the money-changing area in central Tehran said registered dealers were no longer selling dollars in their shops, leaving the market to informal traders in the street -- a situation resulting in dollars becoming scarce and thus much more expensive.

The fall sent a shock through Iranian companies.

"It's a disaster," a manager of a business in Iran's import sector told AFP on condition of anonymity. "One business lady was really crying; she was losing millions of dollars."

State Department spokeswoman Victoria Nuland told reporters Monday, "The currency is plummeting and firms all over the world are refusing to do business with Iranian companies.

"These are the most punishing sanctions we have ever been able to amass as an international community and they are very important for trying to get Iran's attention on the important denuclearization work."