Iran Currency Rial rebounds on Speculations of great breakthrough

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Iran’s currency rial has rebounded in unofficial trade on news the government would launch an unspecified but massive program to shore up finances affected by coronavirus pandemic and US sanctions.

The rial surged by nearly 10 percent against the US dollar on Sunday, selling at 215,000 against the greenback, according to rates on currency monitoring websites. The surge came a day after Central Bank of Iran (CBI) Governor Abdolnasser Hemmati said the government would move to bring down the currency prices. Hemmati said that currency prices had a bubble and did not reflect the actual value of the rial and the general situation of the Iranian economy. “We would bring down the exchange price this very day or tomorrow and we will show to the people that the government has never sought to inflate the exchange (rate) to finance its budget deficit,” said Hemmati in a Friday interview with the IRIB News. Rial’s rebound also came on the back of news that there would be a major “breakthrough” in the country’s economic situation in the coming days.

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Senior officials have signaled that the government is preparing a major financing scheme with huge implications on an economy which has suffered both as a result of the spread of the coronavirus and because of the American sanctions. Some experts have suggested that the government is planning to issue one-year or two-year bonds whose yields will be determined by future prices of oil. Many expect such massive bond issuance would further affect the exchange rate, a key barometer of the Iranian economy. CBI governor Hemmati admitted in his Friday interview that the exchange rate was negatively affecting the economy as it has caused prices of basic goods to go up. “The dollar rate has turned into an important indicator in our economy but this issue will be fixed and we will use all tools to moderate the rate,” he said.

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