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The currency crisis, a great disaster!

http://irantag.net/?p=5560

The speech by Valiollah Seif, the Director General of the Central Bank of the Islamic Republic of Iran, in which he tried to explain why the Iranian currency is rapidly becoming worthless against the dollar, was greeted with cries of “Resign! Resign!” by the parliamentarians who demanded that he step down from his post.

The director of Iran’s Central Bank was shouted down during a meeting with MPs at the country’s parliament where his efforts to explain the current rapidly spiraling economic crisis were greeted with skepticism by the MPs, many of whom loudly demanded his resignation.

The speech by Valiollah Seif, the Director General of the Central Bank of the Islamic Republic of Iran, in which he tried to explain why the Iranian currency is rapidly becoming worthless against the dollar, was greeted with cries of “Resign! Resign!” by the parliamentarians who demanded that he step down from his post.

The angry parliamentarians, who rejected Seif’s excuses for the failing currency during a meeting with the MPs, even physically shoved him in an effort to force him to stop speaking.

According to state media, a large number of MPs attended the meeting with Seif who was due to speak at the parliament on the subject of the currency exchange rate and the Iranian Riyal’s rapid devaluation; after heated argument and expressions of open hostility towards Seif, those present at the meeting voted for Seif to go ahead with his speech about the current economic crisis and with a related question-and-answer session in parliament at a later date, with both to be broadcast live on state TV

The latest tensions came as the Iranian currency continues to lose value. In recent days the Iranian Toman has fallen from 5,000 Tomans to one US dollar to 5,580 Tomans to the dollar, with some reports stating that the exchange rate provided by some ATMs had reached 6,000 Tomans to the dollar. The steepest decline was recorded in one night – the night of Saturday 7 April to Sunday 8 – when the value fell by 16 percent.

Such severe currency price fluctuations are significant in any country, reflecting serious political and economic turbulence which can be caused by many individual factors, such as declining growth, increased demand for the dollar, inflation, high import levels or sudden demand for other economic services. External factors can also affect the price of currency, such as, wars, diplomatic crises, international blockades, or sanctions on foreign exchange transactions. In Iran, a range of domestic and external crises have merged to create a political and economic ‘perfect storm.’ Over the past year, the Toman has gradually lost a great amount of value against the dollar, although the sharpest decline, as seen on April 8, hadn’t been witnessed prior to that.

 

In sum, the sudden and unprecedented overnight fall in the value of the Iranian Toman is associated with a bigger and more dangerous domestic crisis than the latest 2017 uprising, which did not lead to such a sharp decline. Many believe that the real reason behind this sudden crisis is a massive shortage of U.S. dollars due to large sums of dollar currency being transferred out of Iran. Some argue, that Iran is buying more arms to counter the upcoming war against Israel and the United States, which they believe will be fought via Syrian and Lebanese territories. Certainly, reading the Iranian officials’ statements in recent days seems to lend plausibility to this second theory. However, another suggestion is that the fall of the Toman’s value against the US dollar has been caused by a speculative frenzy by rich Iranians who simply sought to push the dollar’s value higher in order to reap the best gains. This suggestion seems less probable an would only be plausible if one turns a blind eye to the timing of the US dollar’s rise in value during a period of worsening tension between Iran, the United States, and Israel— if we assume this timing is not more than a coincidence.