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The New Arab Staff

Iran currency tumbles to new low against dollar, signalling deeper economic woes

Iran is set to lose $20 billion in foreign reserves this year [Getty]

Date of publication: 7 July, 2020

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The latest dip has prompted Iran's central bank to inject millions of dollars into the market, in a bid to stabilise the diminishing currency.

Iran's currency has plummeted to a new low, standing at 215,000 rials to the dollar on Monday, according to website Bonbast.com.

The figure is lower than the record-breaking value of 190,000 rials to each dollar, reported in June.

Iran
's currency has been in free-fall since 2018, when the US withdrew from a 2015 nuclear pact between Tehran and six global powers, and reimposed sanctions.

The latest dip has prompted the central bank to inject millions of dollars into the market in a bid to stabilise the currency.

Central Bank Governor Abdolnasser Hemmati has described the move as "wise and targeted".

Traders in central Tehran exchange offices are now refusing to sell dollars, Reuters report, amid government calls warning Iranians against panic-buying.

An unverified video circulating on social media showed a group of Iranians charging into a bank to purchase US dollars.

Iran is currently running a fiscal deficit, something analysts say is due to the collapse in oil export revenues.

The government has been forced to balance its checkbook by using its foreign exchange reserves, raising fears of depleting foreign currency.

According to the International Monetary Fund (IMF), Iran is set to lose $20 billion of reserves this year, and another $16 billion next year.

Despite the creation of several foreign exchange rates aimed at ease the financial burden of importers, hard currency needed for trade is difficult obtain.

Read also: Angry Iran protesters demand resignation of central bank governor amid rumoured embezzlement

Rising taxes, falling subsidies and foreign markets limited by sanctions have also hit businesses hard.

This has led to near-daily increases in the price of basic commodities, such as bread, meat and rice.

Inflation this year is estimated at 34.2 percent, according to the International Monetary Fund (IMF)

In November 2019, mass protests broke out against a sudden hike in fuel prices. Reuters report that nearly 1,500 were killed in the ensuring government crackdown, a figure rejected by the government

Agencies contributed to this report.

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