Iran Blames Trump, Saudis, Social Media as Currency Nosedives

By Patrick Goodenough | April 11, 2018 | 4:23am EDT
Iran's national currency, the rial, hit a record low against the U.S. dollar this week. (Photo: Central Bank of Iran)

( – Iran’s national currency is languishing at an all-time low against the U.S. dollar, and Iranian officials are blaming regional “enemies,” President Trump’s threats to withdraw from the nuclear agreement – and Telegram, an encrypted messaging app that millions of Iranians use.

In a desperate attempt to stem the slide, authorities after an emergency cabinet meeting fixed the exchange rate from Tuesday at 42,000 rials to the dollar in both the official and unregulated markets.

(Iran has had a two-tier system since the 1970s – an official commercial rate for imports and approved foreign exchange transactions and a free non-commercial rate applicable to other transactions.)

Announcing the move in a televised statement, First Vice President Eshaq Jahangiri said anyone caught trading at anything other than the new unified rate of 42,000 would be considered a smuggler and dealt with “severely,” the official IRNA news agency reported.

Jahangiri blamed “noneconomic, unjustified, and unpredictable factors” for the state of affairs, and pointed a finger at the United States.

“It is natural that our enemies and opponents, especially the Americans, after the nuclear deal was agreed and after [President] Trump took office, have made great efforts to try and present Iran’s economy as turbulent, and try to discourage anyone from working with Iran.”

Most international sanctions on Tehran were lifted in 2016 under the nuclear agreement known as the Joint Comprehensive Plan of Action (JCPOA), but major international banks remain leery of doing business in Iran.

Trump has asked the U.S. Congress and European allies to “fix” the JCPOA, failing which the U.S. could withdraw from it next month, a move that would see some sanctions reimposed.

Jahangiri sought to reassure Iranians, saying the country had sufficient foreign exchange reserves and would not allow non-economic elements to undermine its economic stability.

Before the 1979 Islamic revolution, a dollar cost 70 rials, a rate that held before jumping to almost 2,000 in the early 1990s, then to 8,000 in 2002, to 25,000 in 2013, and climbing ever since.

On Monday, the unregulated exchange rate reached 60,000 rials to the dollar, up from about 48,000 on April 1 and around 36,000 last September.

Prof. Steve Hanke, professor of applied economics at Johns Hopkins University in Baltimore, Md., noted on his Twitter feed Tuesday that the rial had depreciated 45.2 percent against the dollar since the eruption of protests in Iranian cities last December.

A still from Iranian state television shows angry lawmakers storming the podium to remonstrate with Central Bank of Iran governor Valiollah Seif on Tuesday, April 10, 2018. (Screen capture: IRIB)

The governor of the Central Bank of Iran (CBI), Valiollah Seif, appeared before parliament on Tuesday to answer questions about the latest rout, telling lawmakers “we are not in the ordinary situation and our enemies are continuing to plot.”

Specifically he blamed Saudi Arabia and the United Arab Emirates – the Sunni Gulf states embroiled in a bitter rivalry with Shi’ite Iran – and said social media, especially Telegram, were being used to spread panic by publicizing market news.

(An estimated 40 million Iranians use Telegram. The regime has blamed the app, which features a message “self-destruct” function, for spreading unrest during the recent protests, and says it plans to launch an Iranian “alternative” to Telegram in the coming weeks.)

The CBI governor also announced that plans to replace the dollar with the euro in foreign trade transactions were being speeded up, adding that supreme leader Ayatollah Ali Khamenei had welcomed that decision during a meeting on Monday to discuss the currency slide.

According to Iranian media reports, lawmakers were not all convinced by Seif’s explanations. State television footage showed some surrounding and mounting the podium, accusing him of poor management and demanding that he resign.

Although Iran faced sanctions of varying level of effectiveness over the years since its covert nuclear activities were exposed in 2002, experts have blamed previous currency crises less on sanctions than on economic mismanagement and, in some cases, foreign adventures like the campaign to prop up Syria’s Assad regime.

Before the Islamic Revolution, it took about 70 Iranian rials to buy one U.S. dollar. Today it will take you 60,000,” tweeted Foundation for Defense of Democracies executive director Mark Dubowitz.

“Yet one more example of the utter failure of the Islamic Republic. Iranians deserve better than this regime.”

MRC Store