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Tuesday, January 03, 2012

Iranian rial slammed by sanctions

The 20,000 Iranian rial note in the picture is now worth about $1.25. And it's falling quickly. That's the result of the United States finally adopting some real sanctions against Iran.
Iran’s ailing currency took a steep slide Monday, losing 12 percent against foreign currencies after President Obama on Saturday signed a bill that places the Islamic republic’s central bank under unilateral sanctions.

The currency, which economists say was held artificially high for years against the dollar and the euro, has lost about 35 percent of its value since September. Its exchange rate hovered at 16,800 rials to the dollar, marking a record low. The currency was trading at about 10,500 rials to the U.S. dollar in late December 2010.


But in Tehran, people said they were bleeding money. Currency traders stopped writing exchange rates on the whiteboards propped against their shop windows as residents were trying to buy foreign currency.

“I am selling my motorcycle in order to invest it in dollars,” said Mehrdad Allahyari, a computer engineer. “My dream is once to buy a BMW car, but now our leaders are even destroying that.”

Although some say that the government, which says it holds a lot of oil dollars, is gaining from the crisis, the slide of the rial is a huge blow to Iran’s leaders, who have been claiming that the sanctions aren’t hurting the country. The currency drop feeds increasing worries that the government is running out of funds.

The Central Bank of Iran had said Sunday that the United States had become the laughingstock of the world after Obama signed the latest round of sanctions aimed at the institution, Iran’s key axis for oil transactions. But Monday afternoon, the bank held an emergency meeting over the sliding rial, the semiofficial Mehr News Agency reported.



At 7:20 PM, Blogger NormanF said...

The new sanctions are hurting the mullahs and are crippling the economy.

Anything that impedes their ability to sustain their nuclear program is welcome.

But it may not be enough to stop Iran from getting the bomb.

What could go wrong indeed

At 4:07 AM, Blogger Captain.H said...

As I see it, sanctions, however strong and comprehensive, are meaningless. The Mullahs absolutely do not care how much ordinary Iranians are suffering. They don't care if the Iranian people have to eat grass, as long as they, the Mullahs, have the funds to finance their nuclear weapons program. As the Mullahs have control of the Armed Forces, the Revolutionary Guard and the Secret Police, they will use these instruments to suppress the people and continue as fast as possible their development of nuclear weapons.

I don't claim to be any kind of an expert. That said, all my readings about Iran forced me to conclude several years ago that only a heavy concerted military campaign, naval and air forces, taking from days to a week or two -strike, assess damage, re-strike, reassess and re-strike, if necessary- can stop the absolutely determined Mullahs from acquiring nuclear weapons. And as great as is my regard for the IDF, I think only the US has sufficient military power to eliminate the Iranian nuclear weapons complex.

And I don't see Obama ever being willing to do that. If an American strike is to happen, it won't happen unless and until a Republican beats Obama this November, takes office and gives the order. With the exception of Ron Paul, all of the Republican candidates would, I think, give the order very early in their administration.

At 7:20 AM, Anonymous Anonymous said...

Obama will never press sanctions full-bore and said so in his signing statement on the latest version. Those nuclear bombs however don't exist yet. They are going to have to test the things. Before they fully commit. Dropping a dud on Tel Aviv that just lay there squashed on the pavement would be a huge ooops! moment. Then Israel can pull the trigger or decide not to. Ron Paul of couse would sell the Iranians uranium and technical know-how.


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