Iran braces for deepening economic crisis ahead of new US sanctions

A man withdraws Iranian Rial notes from an automated teller machine in the capital Tehran on July 31, 2018. Iran's currency traded at a fresh record-low of 119,000 to the dollar on today, a loss of nearly two-thirds of its value since the start of the year as US sanctions loom. / AFP / ATTA KENARE
Updated 05 August 2018

Iran braces for deepening economic crisis ahead of new US sanctions

  • Iran announced on Sunday a plan to ease foreign exchange rules
  • Iranian central bank’s top foreign exchange official arrested

LONDON: Iran announced on Sunday a plan to ease foreign exchange rules, state television reported, as Tehran tries to counter the effects of a plunging currency and prepares to face new US sanctions.
The plan lifts a ban on the sale of hard currency at floating rates by exchange shops for purposes such as overseas travel, according to Reuters News Agency. Exporters would be allowed to sell hard currency to importers, and there would be no limit on bringing currency or gold into the country.
Hard currency will be made available at a subsidized rate for purchases of basic goods and medicine, state television quoted a government statement about the plan as saying.
The news came shortly after the Iranian central bank’s top foreign exchange official had been arrested, according to the judiciary, a day after he was sacked and as tensions rise ahead of reimposed US sanctions.
Agence France Presse reported that Ahmad Araghchi, who was a vice-governor at the bank in charge of forex, was arrested along with several other unnamed individuals including a government clerk and four currency brokers, said judiciary spokesman Gholam-Hossein Mohseni Ejeie in a statement, according to state broadcaster IRIB.
The arrests come amid heightened tensions in the run-up to the reimposition of US sanctions on Tuesday, following Washington’s withdrawal from the 2015 nuclear deal.
Journalists reported a heavy build-up of riot police on Sunday night, including at least one armored personnel carrier, in the town of Karaj, just west of Tehran, that has seen days of often-violent protests.
State media said protesters attacked and tried to burn down a seminary in the area on Friday night, and that at least one person was killed, allegedly by demonstrators.
There have been days of sporadic protests, including in key cities such as Isfahan, Mashhad and Shiraz — but severe reporting restrictions have made it impossible to verify social media footage and official accounts.
The embattled government of President Hassan Rouhani has also faced heavy criticism from conservative opponents, who have demanded action on corruption and renewed efforts to rescue the economy.
On Saturday, Grand Ayatollah Hossein Nouri-Hamedani, one of the country’s top religious figures, said “economic corruptors” must face justice.
“People are upset when they hear that someone has embezzled billions while other people are living in tough conditions,” he said in a speech, according to the conservative Tasnim news agency.
Araghchi, a nephew of deputy foreign minister Abbas Araghchi, was fired by the new governor of the central bank on Saturday, apparently over his handling of the currency crisis.
Iran’s rial has lost more than half its value since April, in part over fears of renewed sanctions, but also thanks to an ill-judged attempt to fix the value of the rial that month and make it illegal to trade at a higher rate.
That decision triggered widespread currency speculation on the black market, and accusations that individuals with political connections were abusing the system.
Rouhani sacked the governor of the central bank, Valiollah Seif, last week and replaced him with Abdolnasser Hemati, the former head of Central Insurance of Iran.
Hemati is due to unveil a new foreign exchange policy on Monday, a day after it was approved by the government.
IRIB reported that the new policy is expected to see imports of essential items, including medicines, remain at the official government exchange rate of 42,000 rials to the dollar.
The unofficial rate for the rial fell to a record 119,000 last week, before rallying in response to the government’s efforts to address the crisis, and stood at 98,500 on Sunday night.


Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

Updated 14 October 2019

Struggling WeWork mulls bailout deals with SoftBank, JP Morgan

TOKYO: Under-pressure start-up WeWork is considering two huge bailout plans including a cash injection that could see Japanese investment titan SoftBank take control of the firm, according to reports.
The office-sharing giant had been on course for a massive initial public offering until last month when questions began to be asked over its governance and profit outlook.
The firm’s valuation plunged from $47 billion in January to less than $20 billion in September and the listing plans have been dropped, while co-founder Adam Neumann stepped down as chief executive.
With New York-based parent company We Co. not expected to push for the IPO this year, the cash-strapped firm is looking for a financial lifeline.
The Wall Street Journal, New York Times and Bloomberg News cited unnamed sources close to the talks as saying SoftBank — the US firm’s biggest shareholder — had drawn up a proposal that gives it full control of WeWork.
The move would dilute the voting power of Neumann, who remains as chairman of the company he started in 2010 and also currently maintains control a majority of voting shares.
They also reported that WeWork is looking at a deal with Wall Street giant JP Morgan to raise $5 billion in debt, with the Times saying directors of We would be meeting as soon as Monday afternoon to discuss that.
“WeWork has retained a major Wall Street financial institution to arrange financing,” the Journal reported a company spokesman as saying.
“Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”
The New York-based startup that launched in 2010 has touted itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.
However, the company, which lost $1.9 billion last year, has faced skepticism over its ability to make money, especially if the global economy slows significantly.