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The Iranian rial has fallen 30% against the U.S. dollar in the past six months, making purchases in U.S. dollars more expensive. Iran is boosting the monthly cash payments it gives to its citizens by more than fifty percent, the Iranian Labour News Agency reported, as soaring inflation and the depreciating Rial continue to bite deep into the national economy.
Historical Data
The currency of Iran is the Iranian Rial (IRR). From early 80s to 2001, Iran had a multi-exchange-rate system; one of these rates, the official floating exchange rate, by which most essential goods were imported, averaged 1,750 rials per US dollar; in March 2002, the multi-exchange-rate system was converged into one rate at about 7,900 rials per US dollar. The Unofficial - Street Exchange Rate used among small businesses and private transactions was much higher than official multi-exchange-rate prior to 2002. Since going to a single exchange rate the official and "Street-rate" have come much closer. We compare the official and "Street-rates" to ensure rates listed below are the most accurate indicative of the true IRR-USD exchange rate. US Dollar (USD) is the most widely used foreign currency and the new $100 bills are preferred for street transactions and get the best rate.
Exchange control authority is vested in Bank Markazi Jomhouri Islami Iran (Central bank of Islamic Republic of Iran). All foreign exchange transactions must take place through the banking system.
- 9/30/2011 to 3/27/2012
Reserves
During the 6.5 years of Mahmud Ahmadinejad's presidency, more than $470 billion of oil income has entered the government's treasury, thanks to high oil prices. The mechanism that the government uses to provide for its local currency budget is to sell the foreign exchange that has earned to the central bank and instead the central bank delivers rials to the government. These foreign currency deposits form the foreign reserves of the central bank. The current figure is estimated $75 billion. The difference between the $470 billion of oil income and ($75 billion of foreign reserves subtracted from the balance of foreign reserves when Ahmadinejad took office) is the amount that the government has spent for various purposes such as imports, debt payments, and other expenditures to fulfill its foreign currency needs.
GOLD RUSH
While it will not come as a major surprise to most, Iran has been actively purchasing gold well over the amount reported to and by the International Monetary Fund, in an accelerated attempt to diversify its reserves away from the US dollar, in a sign of growing political pressure. Market observers believe Tehran has been one of the biggest buyers of bullion over the past decade after China, Russia and India, and is among the 20 largest holders of gold reserves with an alleged 300 tons or 9,600,000 oz. If the gold price is assumed $1,600 per ounce today, Iran's current gold value amounts to about $15.4 billion.
Impact on Oil
Crude has jumped from $75 in October amid growing concern a military strike by Israel or the U.S. against Iran's nuclear facilities would disrupt global crude supplies. Iran and the six nations -- the United States, Britain, France, Germany, Russia and China -- have agreed to meet on April 13 for new talks about Tehran's nuclear program, diplomats told The Associated Press on Monday. President Barack Obama said Sunday that there is still time to resolve the dispute over Iran diplomatically, but that the window is closing. Other analysts expect worries about Iran will keep oil prices elevated. Iran is the world's third-largest crude exporter, and reports last week said its oil sales abroad fell sharply last month, suggesting sanctions imposed by Western powers have begun to hurt Iran's economy. Saudi Arabia has pledged to increase production to replace Iran's lost output, but that would leave little spare capacity, analysts say.
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