Iranian government may take over currency trading to cope with inflation
A battle of wills between Iran’s government and foreign exchange traders may end with authorities taking over all legal trade in the rial, leaving many Iranians to seek hard currency illegally in a poorly supplied black market.
This arrangement would probably let the economy limp on in the face of Western economic sanctions. But it might also increase corruption, distort companies’ business decisions and fuel middle-class discontent with President Mahmoud Ahmadinejad…
It is not clear, though, whether the government will over the long term have enough hard currency to satisfy all demand through its official channels, especially if sanctions cut its exports far enough to push its trade balance into deficit.
At the end of last year, Iran had official foreign reserves of $106 billion, according to the International Monetary Fund. Their current level is a closely guarded secret, but some analysts estimate they may have dropped by several tens of billions of dollars as the sanctions cut Iran’s oil income.
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So let me get this straight, the very Mullahs that have caused the inflation are nowing going to manipulate the currency market?
What could possibly go wrong?
JFKY on October 9, 2012 at 3:34 PM
If you believe the Business Insider article this is already happening. The government is supposedly shielding the poor (Ahmadinejad’s base) from the inflation by keeping the exchange rate on the essentials unchanged while sticking it to the middle class by shifting the exchange rate burden to the non-essentials in the bazaars.
MobileVideoEngineer on October 9, 2012 at 3:36 PM
It MIGHT? Oh I’m sorry it’s Al-Reuters, of course, it only MIGHT have these perncious effects…my bad.
JFKY on October 9, 2012 at 3:37 PM
Has AchMyDinnerJacket forgotten that it was the Baazari‘s and the Middle Class that tossed the Shah out on his ear?
JFKY on October 9, 2012 at 3:38 PM
Because as we all know, any thing free markets can do, government can do so much better!
ZenDraken on October 9, 2012 at 3:41 PM
Can we send them Bernake? It sounds like his type of problem.
Oil Can on October 9, 2012 at 3:41 PM
Well YEAH-Uh, that’s why we’ve had Cash for Clunkers and the Stimulus…
JFKY on October 9, 2012 at 3:42 PM
Yeah, well, it WOULDA worked if we’d just thrown more money at it! But greedy Mitt Romney is holding it all back for hissef.
ZenDraken on October 9, 2012 at 3:49 PM
It’s really OBAMA’S fault…the Stimulus shoudda been a BAJILLION Dollars, not nearly a Trillion Dollars….if we’d have just spent more, we’d have -8.0% unemployment.
JFKY on October 9, 2012 at 3:53 PM
So let me get this straight, the very Mullahs that have caused the inflation are nowing going to manipulate the currency market?
What could possibly go wrong?
JFKY on October 9, 2012 at 3:34 PM
Gatsu on October 9, 2012 at 3:56 PM
Maxine Waters approves.
Mimzey on October 9, 2012 at 3:56 PM
So to not use the “Allah” will be blasphemy!?
JFKY on October 9, 2012 at 4:00 PM
Black market, ho-oooo!
mojo on October 9, 2012 at 4:49 PM
Only for the higher-ups and well connected.
Trading on the black market in Iran is riskier than doing so in the old USSR. The latter shipped you off to Siberia for hard labor. The former doesn’t have a Siberia, and will probably just behead you.
MelonCollie on October 9, 2012 at 8:51 PM