In the first official reaction to a
weeklong national currency fiasco that has seen the rial loosing 30 percent of
its value against the dollar, the Governor of the Central Bank of Iran (CBI) Mahmoud Bahmani said Iran will allocate 14.5 percent of its oil
revenues and all its petrochemical sales to support the rial. Bahmani said that
the CBI will provide enough dollars to a newly established state-run foreign
exchange center to meet all demands. (Mehr News Agency, 1 October)
Other Iranian officials have not commented on nor confirmed CBI’s plans to use oil revenues to support
the currency. It was not clear whether the government could afford using
that huge amount of oil and petrochemical revenues on a currency on downward
spiral while the severe financial sanctions against the country are still in effect.
10 comments:
11 ndlnslyoil revenue WAY DOWN and still dropping and here's another chunk gone.
This is correct action because in 2008, Russia was in similar situation, where foreign agencies attempted to bring the russian currency down and to cause a total hyperinflation in the country.
They used international hedge funds and organized "speculators" to carry out that plan.
Rushian leadership used almost 20% of their national fund's reserves to withstand that attack.
Situation had stabilized after those "speculators" lost tens of billions of $.
9eThe value of the dollar/rial is largely irrelevant to the condition of Iranians.
A far more useful measure would be the weighted average price, in rial, of a basket of goods.
If anyone is in Tehran they should provide this.
The Iranian government could very easily tackle this problem by penalizing dollar holdings, by taxing it.
Simply state that if anyone is found holding a dollar based account in Iran, or dollars in cash, it will be taxed (expropriated) at a rate of 30% or so. Impose severe penalties for attempts to evade the tax.
The problem is that the Iranian government does not really have control over its population and thus could not enforce a tax.
The irony is that while Americans think they have freedom and Iranians think they have oppression, the opposite is true. Iran is a law of the jungle free market. The US is tightly controlled.
3:42, Even if that is true, which it might be -- Russia had 500 billion in reserves. Iran is no where near as capable of fighting in that manner, unless as I describe above they tax dollar holdings.
Anon 3:42 AM
And how is it irrelevant when even grain has to be bought DOLLARS?
All staple goods are imported into Iran and is purchased with US DOLLARS.
So it is not irrelevant to the Iranian people,but the exact opposite.
Anon 10:38AM
The government has announced that it will prosecute speculators for making profits in that situation.
If someone did not trusted iranian currency before, they should not expect that government protects their wealth in difficult times.
And it is reasionable move to tax richer people more in a crucial times for the country. They benefited more during better times; they got education and other commodities at cheaper prices and now they are expected to support the country in confrontation with enemies.
Dissident
Hey "Dissident",you are living in your own little dream world,LOL!
"The government has announced that it will prosecute speculators for making profits in that situation."
The government says they will, but they don't do anything. The government either has no control over its people, or they're they ones making money off of the dollar increase!
It would be so extremely easy to stamp out dollar purchases.
Tell me this, how can the government make sure that every woman covers her head, but they can't make sure that people don't own foreign currencies?!
Anon 12:23 AM
Those who are so concerned about their dollars (and apparently love the West), should be informed by the Iran's Government that for their dollars they can purchase a gallon of fuel for $4.50, loaf of bread for $3.60 and get a dental care for $900 per tooth etc... and that by using the rials everything would be slightly cheaper.
Dissident
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