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Iran grapples with currency market turmoil

Iran grapples with currency market turmoil
By Farhad Pouladi (AFP) – 6 hours ago

TEHRAN — Iran’s currency market was in turmoil Wednesday as the central bank imposed draconian measures to try to shore up its beleaguered rial in the face of existing and looming Western sanctions.

The bank was imposing a fixed low rate of 14,000 rials to the dollar on the open market, traders said.

Some had shuttered their shops in the centre of Tehran, refusing to make transactions at that artificial level.

The central bank also halved the amount of dollars Iranians flying abroad could buy at a slightly lower preferential rate, to $1,000 instead of the $2,000 previously allowed, according to an official statement relayed by media.

The measures were applied after the rial lost 12 percent Monday, days after the United States enacted new sanctions against Iran’s central bank.

The European Union is expected to follow up with its own economic sanctions on Iran at the end of this month. France, Britain and Germany are calling for an EU embargo on Iranian oil imports to be adopted.

The Iranian central bank’s imposed rate of 14,000 rials to the dollar theoretically pumped up the value of the Iranian currency 21 percent from a record low 17,800 it hit Monday.

The Association of Iranian Exchange Bureaux issued a statement saying its members, who are licensed by the central bank, were instructed to stick to the 14,000 rate.

But exchange bureaux that had not shut their windows Wednesday were refusing to sell dollars at all.

Street money-changers were walking around discreetly offering the much-higher rate of 15,700 to the dollar.

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