30 May 2024
Wednesday 20 February 2019 - 11:27
Story Code : 339242

Iranís central bank under pressure to print money, weaken rial

Al-Monitor | : A disagreement between the Central Bank of Iran and factions of the government, backed by lawmakers, over profits from foreign exchange sales has now taken the form of a pending amendment to the countryís annual budget law. If passed by the Guardian Council, the amendment ó which calls on the central bank to pay a significant sum to the government as tax Ė will increase money supply and exacerbate inflation. It could also negatively impact foreign exchange rates, ultimately hurting average Iranians the most.

Roughly a year ago, when drafting the annual budget law for the running Iranian fiscal year, which will end March 20, the rate of the US dollar was set at 35,000 rials. It drew fire from pundits, who said the rate had once again been unrealistically set. That proved true, especially since the government moved to ďunifyĒ the countryís dual foreign exchange rates and tried to fix the rate of the rial against the dollar at 42,000 rials.

But the currency crisis that formed on the back of returning US sanctions, after US President Donald Trump unilaterally withdrew from the Iranian nuclear deal, devalued the rial far more. After President Hassan Rouhani and Trump had a showdown at the United National General Assembly in late September, the rial hit an all-time low of 190,000 rials to the greenback.

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