Rial has plunged 40% against the dollar as sanctions wreak havoc
Iran has few policy options to end turmoil in its currency markets, as the U.S. and allies seek to inflict enough economic pain to force the Islamic republic into concessions over its nuclear plans, analysts said.
The rial has depreciated as much as 40 percent against the dollar in street markets since August and gold purchases have surged as residents seek to shield savings. The currency plunge led to unrest in Tehran's markets last week as police used tear gas to end protests. Iran has raised interest rates on deposits and opened an exchange center to stabilize the currency market. ...
"I don't see what Iran can do on the economic front other than try to avoid sanctions by exporting to countries that are prepared to use their currency as payment," said John Williamson, a senior fellow at the Peterson Institute for International Economics in Washington. "I don't think monetary policy changes will make any difference. People aren't going to examine interest rates when their savings are being confiscated." ...
Concern that savings are being eroded is leading Iranians to other assets, including gold
Turkish sales of precious metals
to Iran jumped to $6.2 billion through July from $21.9 million in the same period last year. Wealthy Iranians in Turkey are collecting gold
and exporting it to Iran, the Istanbul-based Zaman newspaper said July 11. Iranians in Dubai and India are also collecting gold
and sending it to the central bank, Zaman said.