Currency rates in exchanges

For the first time, the US dollar has crossed the 84,000 toman mark in Iran’s free market. This historic surge clearly highlights the market maker’s inefficiency and the growing inflationary expectations within the country.

Rising Trend and Weak Market Intervention

The market maker, tasked with stabilizing exchange rates, usually intervenes by injecting foreign currency into the market to balance supply and demand. However, recent developments indicate that the market maker has either failed or opted not to intervene effectively in the unofficial market.

This lack of intervention could stem from several factors:

Dwindling Foreign Exchange Reserves: The Central Bank may be facing a shortage of reserves, limiting its capacity to intervene.
Increased Sanctions Pressure: International sanctions have further restricted Iran’s access to foreign currency resources.
Speculative Demand Surge: Inflationary fears have driven up artificial demand for foreign currency, putting additional strain on the market.

Key Drivers Behind the Dollar Surge

Inflationary Expectations: As prices for goods and services rise, people turn to the dollar as a safe haven to preserve their purchasing power.
Increased Demand: Economic uncertainty has fueled a rise in demand for foreign currency as a hedge against the falling value of the national currency.
Weak Currency Policies: Ineffective decision-making in regulating the foreign exchange market, including delays in resource allocation, has exacerbated the situation.

Implications and Outlook

The dollar crossing the 84,000 toman threshold has significant implications for Iran’s economy:

Higher Costs for Imports: This will increase the price of imported goods, intensifying the financial burden on households.
Growing Inflationary Pressures: The rise in exchange rates further fuels inflationary expectations, creating a cycle of economic instability.

Conclusion

The surge of the US dollar beyond 84,000 tomans serves as a critical warning for Iran’s economy. Effective and strategic intervention by the market maker, coupled with robust economic policies, is crucial to curb further currency depreciation and prevent a deeper crisis.