Update: Iran's rial hits record low amid nuke deal wrestle with U.S.

by Hassan Rouhvand

TEHRAN, April 9 (Xinhua) -- Iran's currency rial hit an all-time low against major foreign currencies on Monday.

In the street market, one U.S. dollar was traded for 61,000 rials and one euro was for 70,500 rials, registering a loss of more than half of rial's value over the past year.

Official exchange centers and currency dealers in downtown Tehran suspended trades on Monday, citing the instability of exchange rates.

Over the past days, many street traders were arrested over deliberately creating turmoil in the market for monetary gains.

However, a main cause behind the market turbulence could be the rising tension between Iran and the United States over the 2015 Iranian nuclear deal, as the latter has repeatedly threatened to pull out of it and reimpose sanctions.

U.S. President Donald Trump extended sanctions relief on Iran last month, while warning that it would be the last waiver.

On Jan. 12, the White House announced that U.S. President Donald Trump was seeking from the European countries an overhaul of the landmark deal in the next 120 days, or he would pull the U.S. out of the multilateral pact.

Since 2017 when Trump took office, his administration has imposed several sanctions on Iranian individuals and entities over Iran's alleged human rights abuses and ballistic missile program.

Valiollah Seif, governor of the Central Bank of Iran (CBI), attributed the volatility in rial to political uncertainty fuelled by Trump's anti-Iran rhetoric and his efforts to undermine the nuclear deal.

"The reality is that the United States, especially after the election of its new president, has used its position in the global economy to target the stability of Iranian economy by triggering artificial volatility and spreading anxiety among investors," Seif was quoted as saying by Financial Tribune daily.

The U.S. threats could weaken Iran's negotiation strength for the attraction of foreign funds to help the growth of its economy, he said.

Although some Iranian officials point to the improvement in Iran's global banking relations, big international banks caution against monetary cooperation with Tehran, in fear of running into U.S. legal trouble if the U.S. reapply sanctions.

Earlier in the day, Mohammad Baqer Nobakht, spokesman of the Iranian government, said a special task force has been set up to control the currency market.

New policies would be hopefully developed and implemented in the coming days to regulate the currency market, he said.

The Iranian parliament has also grown frustrated over the performance of the government and the CBI in managing the currency market, Financial Tribune daily reported on Monday.

Mohammad Reza Pour-Ebrahimi, chairman of Majlis (parliament) Economic Commission, took the CBI to task for what he called its "zero" involvement in the foreign exchange market.

Pour-Ebrahimi elaborated on his commission's plan to stabilize the forex market, saying that it is comprised of four parts and will be enacted by CBI.

First and foremost, the plan calls for the revival of foreign exchange accounts in banks that would guarantee the return of deposits plus a decent interest, he was quoted as saying.

Pour-Ebrahimi said 20-25 billion dollars worth of foreign exchange are currently being held outside the banking system, which CBI should lure back into the banking system.

Other proposals include regularizing the foreign exchange market beset by a multiple exchange rate system, regulating the exchange shops and enforcing measures that would require exporters to bring their forex income into the country, he added.

Due to the financial market turbulence, and the likelihood of reduced inflow of foreign capital, the implementation of infrastructure projects of the country, particularly in oil, gas, and petrochemical sectors, will experience a setback.

As Iran imports lots of goods, a decline of foreign investment could also have negative impact on Iranians' lives.

This has raised panic among people as their savings continue to lose value sharply. Enditem