With Rial In Free Fall, Iran Readies Emergency Measures On Eve Of U.S. Sanctions

As you’re probably aware, things aren’t going particularly well in Iran ahead of the re-imposition of U.S. sanctions.

Last week, protests cropped up in Arak, Isfahan, Karaj, Shiraz, Eshtehard and Tehran itself, leaving at least one person dead and dozens under arrest, according to various media reports.

The demonstrations have been described as “sporadic” and generally speaking, lack the kind of organizational backbone and unifying vision necessary to start the ball rolling in earnest when it comes to bringing about sweeping political change. That said, 2018 has been marked by a kind of rolling sense of angst among the populace and that consternation is in part due to the collapse of the Iranian rial.

Back in April, Iran attempted to arrest the slide in the currency and you can take “arrest” both figuratively and literally there. Specifically, authorities tried to unify the official rate with the black market rate by offering to sell dollars at 42,000 rials. Anybody caught selling at higher rates “will be dealt with severely” Iran’s First Vice President Eshaq Jahangiri warned at the time, adding that “any other price that’s offered in the market will be considered contraband, in the same way that illegal drugs are contraband.”

The government was responding to the parallel rate abruptly sliding to 60,000 (give or take). Iran blamed nefarious foreigners and they weren’t entirely wrong, although the “nefarious” characterization depends on what you think about the Trump administration’s hardline stance when it comes to dealing with Tehran. The threat of renewed U.S. sanctions is in large part responsible for the rial’s spiral and since April, things have gotten materially worse. As far as I can tell, the black market rate is now something like 112,000.


Clearly, efforts to rein in the black market have not been successful and late last month, Iran replaced central bank governor Valiollah Seif who, you might remember, was sanctioned by the U.S. Treasury back in May for his role in helping to finance the Quds.


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