In contrary of the Central Bank promise , the exchange rate of foreign
currencies increased dramatically during last week and one US Dollar was
sold 1500 Toman against 1100 official rate.Meanwhile the Central Bank
stopped to sell gold coins as it was announced with enthusiasm and
Ahmadinejad tried to bring confidence to the market during a speech in a
seminar for evaluation of new subsidy law on Tuesday 20 December .
Iranian officials, lawmakers and media on Wednesday worriedly snapped
their focus on to their country's sanctions-hit economy amid a sudden
and accelerating plunge in the currency.
The currency, the rial, was trading at 15,800 to the dollar -- its
lowest point ever, and an indication of the fragility of the economy as
ramped-up Western sanctions bit.
Concerned lawmakers summoned the economy minister, central bank chief
and foreign ministry officials to testify on the economic situation and
how Iran could weather more sanctions expected to be applied soon by
Europe and the United States.
A report by Mehr news agency on Tuesday -- quickly denied by the foreign
ministry -- that vital imports from one of Iran's biggest partners, the
United Arab Emirates, had been cut off added to the widespread jitters
and seemed to fuel the rial's slide.The stumble by the currency undercut avowed Iranian policy to keep the
rial steady against the dollar. It suggested the central bank lacked the
financial firepower to bring the rate under control.
But President Mahmoud Ahmadinejad put the currency slide down to
"rumours" started by profiteers and sought to reassure the public that
the economy was "stable and calm," in a speech broadcast on state
television.
not experiencing any particular problems," he said, asserting that foreign exchange reserves were at a historic high.
On Tuesday, Ahmadinejad said "mischief from outside and inside" the
country was affecting gold and currency prices, according to Iranian
media.
The United States and its Western allies have in recent weeks stepped up
economic sanctions on Iran, to pressure it over its nuclear programme
that they believe masks an drive to build an atomic bomb, despite
Tehran's denials.
Iran-US tensions have also worsened over US accusations of a thwarted
Iranian plot to kill the Saudi ambassador to Washington, Iran's capture
of a CIA drone, and Tehran's arrest and detention of an American-Iranian
it alleges is a CIA spy.
US envoys have visited the region to demand some of Iran's neighbours
also embrace the sanctions drive. One of them, a US Treasury under
secretary for terrorism and financial
intelligence, David Cohen, visited the United Arab Emirates at the end
of November to talk with officials on the issue.
Iranian officials are increasingly admitting that the Western sanctions
are being felt, dropping previous assertions that they were having no
effect.
The measures were believed to be making it more difficult on Iran's
finances, notably its ability to come up with the monthly $2.5 billion
for cash handouts to the population in compensation for domestic fuel
and food subsidies that are being phased out.
Central bank figures quoted by Iranian media say the amount of rials in
circulation has jumped 20 percent in the past five months as more money
is printed.That in turn has driven inflation sharply higher. The central bank says
it is now running at 19.8 percent, but Iranians and anecdotal evidence
suggest it is much higher.
The United States and Europe are expected to soon announce additional
sanctions on Iran, targeting the country's vital oil sector and central
bank