Iran’s rial falls on inflation expectations, nuclear deal news
The Iranian rial has fallen slightly against international currencies amid expectations that a new government plan to overhaul the country’s subsidy system could cause massive price hikes while speculators bet that exchange prices will rise if international talks to revive Iran’s nuclear deal fail to reach a conclusion.
Reports in the local media and currency monitoring websites published on Wednesday showed that the rial had closed at 298,000 against the US dollar in evening trade at the unofficial exchange market in Tehran.
The price was 4.5% higher than rates reported at the close of trade on Tuesday.
Currency prices started rising after the Iranian government announced it had deposited nearly $1.5 billion worth of cash subsidies to accounts hold by households to help them cope with anticipated price hikes for food and other basic goods.
Local newspaper Hamshahri said that government’s Tuesday announcement had "exacerbated inflation expectations" in the market.
It also said that traders in the exchange market believe the government will need more currency resources in the upcoming months to fund imports of food and grain into Iran because of a war in Ukraine that has affected global supply chains.
Others blamed the protracted nuclear deal talks between Iran and world powers for the surge in price of foreign currencies.
The talks have stalled since March on what Iranian authorities call the lack of decisiveness on the side of the United States as a party to the 2015 nuclear deal.
Central Bank of Iran (CBI) governor Ali Salehabadi said on Wednesday that the bank will intervene to quell rising prices in the exchange market if it deems the move necessary.
Salehabadi said the amount of foreign currency bank notes held by the CBI had exceeded record highs reported in the past years.
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