Iran devalues rial rate by more than half

Updated 07 July 2013
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Iran devalues rial rate by more than half

TEHRAN: Iran's central bank yesterday drastically devalued the national currency's fixed subsidized rate against the dollar, as the Islamic republic struggles to shore up its faltering economy.
The rial has lost more than two thirds of its value on the open market since early 2012, when the United States and the European Union imposed harsh economic sanctions curbing Iran's ability to export oil and conduct financial transactions.
The central bank yesterday was selling one US dollar for 24,779 rials at the subsidized rate available only to select importers to procure basic commodities and medicine, according to the bank's website at http://cbi.ir
That rate was a 102-percent increase from 12,260 rials for one dollar that had been kept artificially low since January 2012.
The new "reference" rate is still far stronger than the dollar available to ordinary buyers and travelers at the unofficial open market, which was 33,200 rials per dollar at midday.
By increasing the so-called reference rate, the central bank scrapped its rate used at an "exchange center" that put goods importers in contact with exporters to exchange funds at a rate of around 25,000 to the dollar.
The exchange center, launched late last September, had managed to control the rial's free fall amid increasing international pressure on Iran.
Suspecting Iran's nuclear program has military objectives, Western powers have reinforced a raft of economic sanctions aimed at coercing it into cutting back on uranium enrichment despite Tehran's insistence its atomic ambitions are peaceful.
The sanctions have cost the country billions in vital oil revenues and left it struggling with a shrinking economy, raging inflation and high unemployment.
Yesterday's development came after days of media reports and official denials about pending changes on the official currency market.
According to reports, the budget for the year ending in March 2014 — signed by outgoing President Mahmoud Ahmadinejad in mid-June but the details are not publicized — gave the central bank permission to increase the official exchange rate.
Ahmadinejad's critics accuse his government of misusing the now scrapped cheap dollar, and of failing to feed the market with sufficient foreign currency or provide funds earmarked for essential goods including medicines.
The price of medicine has risen sharply in the past year.
In June, the Health Ministry's Shams-Ali Rezazadeh said the price of domestically produced drugs was set to rise by at least 35 percent, while imported medicine would go up by an average of 90 percent.


Samsung may gain from Huawei’s plight in ongoing trade war: Fitch

Updated 8 min 57 sec ago
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Samsung may gain from Huawei’s plight in ongoing trade war: Fitch

  • The loss of access to Google’s android system may hurt the smartphone sales of Huawei outside China
  • The ratings agency also added that iPhone maker Apple could be another casualty of the trade tensions

Samsung may have a chance to strengthen its position in the smartphone market due to the hurt caused to Huawei Technologies in the wake of US-China trade tensions, according to Fitch Ratings.
Tech companies, including Google and SoftBank Group-owned chip designer ARM, have said they will cease supplies and updates to Huawei.
The loss of access to Google’s android system may hurt the smartphone sales of the Chinese technology company outside China, thereby giving Samsung a chance to improve its market share, Fitch Ratings said in a statement.
Earlier this month, the US government hit Huawei with severe sanctions as the US Commerce Department blocked the Chinese company from buying American goods amid its escalating trade spat with China.
The ratings agency also added that iPhone maker Apple could be another casualty of the trade tensions between Beijing and Washington, which would accelerate its market share loss in China.