Iran's rial hits an all-time-low against the US dollar

  • 1 October 2012
  • From the section Business
Rial and US dollar notes
Image caption The Iranian rial has fallen by 25% in one week

Iran's currency, the rial, fell as much as 18% on Monday to a record low against the US dollar, according to media reports.

It dropped to as much as 35,000 to the dollar, according to agencies citing currency exchange sites in the country.

The currency has reportedly lost 80% of its value since the end of 2011.

The fall suggests economic sanctions imposed over its disputed nuclear programme are hitting economic activity ever harder.

The US state department called them the "most punishing sanctions" ever amassed against Iran.

"From our perspective this speaks to the unrelenting and increasingly successful international pressure that we are all bringing to bear on the Iranian economy," spokeswoman Victoria Nuland said.

"It's under incredible strain."

The rates were not available on the exchanges' websites later in the day. The BBC's Middle East analyst Sebastian Usher suggested the figures had been blanked out because of the extent of the fall.

The latest slide appears to have been triggered by a government move to supply dollars to importers of certain basic goods at a special rate in an attempt to rein in the currency slide, but the move has had the opposite effect.

Iran is all but frozen out of the global banking system as a result of largely US-led sanctions designed to discourage what it says is Iran's attempts to build a nuclear weapon.

Tehran says its nuclear programme is for purely peaceful purposes, such as energy and producing medical isotopes.

The sanctions, which are backed by the European Union, include a ban on the trade of Iranian oil.

The US has threatened to take action against foreign firms and institutions dealing with the Iranian central bank.

It means it is unable to sell its valuable oil assets to most other countries. Analysts suggest it may also have to accept lower prices from countries still willing to trade with it.

Opposition MP Elyas Naderan said last week that the government "was not doing anything to control the market", according to anti-government Iranian news service Rahesabz, quoted by BBC Monitoring.

The Fars news agency also carried an open letter from "Iranian technological analysts" calling on the president to tackle the "dangerous economic situation".

According to the report, also translated by BBC Monitoring, the analysts said that most of the country's economic problems had been caused by the weakness of the currency - as imported raw materials used by manufacturers need to be paid for in hard currency.

A weaker domestic currency makes imports more expensive and is expected to raise prices for people inside Iran.

Latest figures indicate that inflation is running at an annual rate of 24% in Iran.

Dramatic currency falls can also lead to uncertain markets as dealers hoard the harder currency in the hope that it will gain even more in value.

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