Rial’s plunge forces Iran to open door to foreign money

Iran’s currency has lost about two-thirds of its value this year, hitting a record low last week of 150,000 rial to the US dollar. (Shutterstock)
Updated 08 September 2018
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Rial’s plunge forces Iran to open door to foreign money

BEIRUT: Iran gave permission to money exchange offices on Saturday to start importing foreign currency banknotes, state media reported, in an apparent attempt to stop the rial from plunging to a new low against the dollar.
Iran’s currency has lost about two-thirds of its value this year, hitting a record low last week of 150,000 rial to the US dollar. It recovered to trade at 130,000 per dollar on Saturday in unofficial trade, according to the Bonbast.com currency market website.
The rial has been hit by a weak economy, financial difficulties at local banks and strong demand for safe-haven dollars among Iranians.
Many Iranians fear Washington’s pulling out of a 2015 nuclear deal and renewed US sanctions will cut into Iran’s exports of oil and other goods, which would likely put further pressure on the rial.
A set of US sanctions targeting Iran’s oil industry is due to take effect in November.
“Currency exchange offices have been given permission to import currency into the country and they can import currency in the form of bills,” central bank governor Abdolnaser Hemmati said, according to the Islamic Republic News Agency (IRNA).
Currency exchange offices will also be allowed to import gold, the head of the Iranian Parliament’s economic committee, Mohammad Reza Pourebrahimi, said on Saturday, according to the Iranian Students’ News Agency (ISNA). Imports of both gold and foreign currency by exchange offices were previously forbidden, he said.
“In the past, this issue was forbidden and any kind of import would be considered contraband,” Pourebrahimi said.
Hemmati, who was appointed central bank governor in July
in an ongoing shakeup of senior Iranian economic officials, made no mention of the decision on gold imports during his comments.


Tesla secures land in Shanghai for first factory outside US

Updated 17 October 2018
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Tesla secures land in Shanghai for first factory outside US

BEIJING: Electric auto brand Tesla Inc. said it signed an agreement Wednesday to secure land in Shanghai for its first factory outside the United States, pushing ahead with development despite mounting US-Chinese trade tensions.
Tesla, based on Palo Alto, California, announced plans for the Shanghai factory in July after the Chinese government said it would end restrictions on full foreign ownership of electric vehicle makers to speed up industry development.
Those plans have gone ahead despite tariff hikes by Washington and Beijing on billions of dollars of each other’s goods in a dispute over Chinese technology policy. US imports targeted by Beijing’s penalties include electric cars.
China is the biggest global electric vehicle market and Tesla’s second-largest after the United States.
Tesla joins global automakers including General Motors, Volkswagen and Nissan Motors that are pouring billions of dollars into manufacturing electric vehicles in China.
Local production would eliminate risks from tariffs and other import controls. It would help Tesla develop parts suppliers to support after service and make its vehicles more appealing to mainstream Chinese buyers.
Tesla said it signed a “land transfer agreement” on a 210-acre (84-hectare) site in the Lingang district in southeastern Shanghai.
That is “an important milestone for what will be our next advanced, sustainably developed manufacturing site,” Tesla’s vice president of worldwide sales, Robin Ren, said in a statement.
Shanghai is a center of China’s auto industry and home to state-owned Shanghai Automotive Industries, the main local manufacturer for GM and VW.
Tesla said earlier that production in Shanghai would begin two to three years after construction of the factory begins and eventually increase to 500,000 vehicles annually.
Tesla has yet to give a price tag but the Shanghai government said it would be the biggest foreign investment there to date. The company said in its second-quarter investor letter that construction is expected to begin within the next few quarters, with significant investment coming next year. Much of the cost will be funded with “local debt” the letter said.
Tesla’s $5 billion Nevada battery factory was financed with help from a $1.6 billion investment by battery maker Panasonic Corp.
Analysts expect Tesla to report a loss of about $200 million for the three months ending Sept. 30 following the previous quarter’s $742.7 million loss. Its CEO Elon Musk said in a Sept. 30 letter to US securities regulators that the company is “very close to achieving profitability.”
Tesla’s estimated sales in China of under 15,000 vehicles in 2017 gave it a market share of less than 3 percent.
The company faces competition from Chinese brands including BYD Auto and BAIC Group that already sell tens of thousands of hybrid and pure-electric sedans and SUVs annually.
Until now, foreign automakers that wanted to manufacture in China were required to work through state-owned partners. Foreign brands balked at bringing electric vehicle technology into China to avoid having to share it with potential future competitors.
The first of the new electric models being developed by global automakers to hit the market, Nissan’s Sylphy Zero Emission, began rolling off a production line in southern China in August.
Lower-priced electric models from GM, Volkswagen and other global brands are due to hit the market starting this year, well before Tesla is up and running in Shanghai.