The Hidden Aspects of Iran’s Economic Crisis and Fluctuating Market
iran currency crisis
The Iranian rial has once again experienced a sharp decline during the first week of the Persian New Year, 1402, which began on March 21. Last week, the rial was being exchanged at 520,000 against the dollar, and this ongoing fluctuation reflects the bleak state of the Iranian economy.
From January 2023 to March, the dollar rate went from 300,000 rials to 600,000. It dropped to 450,000 a few weeks before Nowruz and once again reached 530,000 rials last week. This instability, even according to officials and state-affiliated experts, has no economic or financial rationale.
On February 27, the clerical regime’s president, Ebrahim Raisi, desperately tried to show that he was not aware of the reason behind the market fluctuations. “How did the dollar exchange rate increase on Mabath [Prophet Muhammad’s first revelation], when the markets were closed?” he said.
Due to the severity of the crisis, some state media outlets and experts acknowledged some aspects of the reality while warning authorities about its social consequences.
On March 2, the state-run Tasnim News Agency wrote about the “hidden aspects” of “determining the exchange rate in Iran’s economy.” “Only a comprehensive look at all its dimensions can explain the reason for the recent increase in the dollar price, which, due to the complexity and ambiguity of Iran’s economy, has no clear explanation for it,” Tasnim wrote.
Unlike some others who blame the regime’s Central Bank, Mahmoud Jamsaz, a state-affiliated economist, laid the blame on Raisi’s government and the “defective corrupt structure of the political economy,” adding that the “Central Bank is just a part of this corrupt cycle.”
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On March 9, the state-run Asia News got closer to the reality, describing the “budget deficit” of Raisi’s government as “one of the main and effective factors about the country’s exchange rate.”
On March 27, the state-run Rouydad24 wrote about the “Sudden increase in the dollar price by the government’s decision,” acknowledging that “public opinion believes that since the government has the largest currency reserves, it plays with the dollar rate, and by increasing it tries to address the liquidity problem or compensate for its budget deficit.”
On February 23, MP Mohammad Taghi Naghdali said, “This currency rate is not real, and we all know that there is devilry behind it.”
On February 21, Iran’s state media released a report regarding establishing the “Center of Gold and Currency Exchange,” as announced by Mohammad Reza Farzin, the governor of the Central Bank.
The purpose of this center is to determine and disclose the accurate valuation of currencies. Farzin also emphasized that the regime remains committed to the distribution of the “Nimaee” currency, or the allocation of dollars to state-affiliated importers at a rate of 280,000 rials.
Besides playing with the exchange market, the clerical regime continues printing banknotes to compensate for its budget deficit. Thus, by increasing liquidity and due to Iran’s low production rate, inflation rises.
In a nutshell, unlike what the ruling theocracy and its pundits try to imply, it is the regime’s disastrous economic policies, not sanctions, that are causing the rising living costs, skyrocketing prices of consumer goods, inflation hovering around 70%, and more people going under the poverty line.
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It is worth noting that the lion’s share of Raisi’s budget for 2023-2024 goes to the regime’s oppressive and terrorist apparatus, such as the Revolutionary Guards (IRGC). And this is in addition to these entities’ “unofficial” financial streams.
Of course, the regime’s policies and their role in increasing the country’s financial calamity would have severe consequences for the ruling clerics, especially amid a nationwide uprising that has rattled the regime’s foundations.
“The early defeat of Raisi’s government and its management shows the system has reached the end of its period of declining efficiency. When the final collapse of the structure will occur depends on many events. But we know that the blade of the scissors is closing on the government from the inside and outside, and one incident is enough to bring the two blades of this scissor together,” Mohsen Ranani, a state-affiliated economist, wrote in an open letter on February 16.