Iran Facing Currency Valuation Crisis
Iran's currency is becoming worth about as much as toilet paper. The leaders' defiance in Iran is exacerbating the pressure that the international sanctions are causing. To show just how bad this has become, the CNBC figures and other outside figures for the currency devaluation in Iran are horrific:
- 10,000 Iranian rials per dollar at the start of 2011… 24,000 rials ten days ago… 29,720 on Sunday… and 35,500 rials as of last look.
Reports from Al Jazeera's English news site are out that Iranian police have clashed with currency protesters. There are reports showing that Mahmoud Ahmadinejad has tried to publicly defend the currency and asked for the currency not to be changed.
Al Jazeera also has news reports that the Iranian leader has blamed enemies causing reduced oil sales. Of course this all pertains to the leadership's defiant nuclear program, so as long as that continues it is probably safe to assume that the pressure will continue as well. Hopefully Mr. Ahmadinejad doesn't think that he can just print more money to stave off a nominal decline in the rial's purchasing power.
Ahmadinejad has tried to claim that foreign trade and commerce are not a large share of the Iranian economy. That may be true, or at least that is true now that Iranians can hardly export anything and can probably not afford to import goods now.
The CIA World Factbook shows that Iran had $109.7 billion in reserves of foreign exchange and gold. The same source showed that 2011 estimates of $131.8 billion exports against $76.1 billion in imports, and the purchasing power of its GDP was projected to be 18th in the world at $1.003 trillion although the 2011 projected GDP was $482.4 billion at the official exchange rate.
JON C. OGG
Filed under: 24/7 Wall St. Wire, Currency, International Markets