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US sanctions hit Iran's economy hard

US sanctions hit Iran's economy hard

As the Iranian economy continues to deteriorate amid the anticipation of Iranians for August 7, on which the United States is expected to re-impose a first batch of economic sanctions, the Iranian riyal fell to its lowest level against the US dollar to reach 100,000 riyals amid an increasing economic crisis and imminent return of US sanctions.


The unofficial rate stood at 102,000 Iranian riyals against the US dollar, according to Bonbast, one of the most accurate websites that follows the Iranian currency.


The Iranian riyal lost half of its value against the US dollar in about four months and its decline exceeded the rate of 50,000 riyals against the dollar in March, while the Iranian government tried to stabilize the currency at 42,000 riyals in April and threatened to launch a campaign on the black market.



But currency trading continued as Iranians worried about a prolonged economic downturn, prompting them to use the US dollar as a safe way to keep their savings or as an opportunity to invest if the Iranian riyal continued to fall.


With banks refusing to sell their holdings of US dollar at an unrealistically low rate, the government was forced to soften its policy last June, allowing more flexibility for some importers.


This prompted Iranian President Hassan Rouhani to expel Head of Iranian Central Bank Waliollah Seif.


The collapse of the Iranian currency began with the fears of the United States in May that it would withdraw from the Iranian nuclear agreement reached in 2015, which led to the lifting of some sanctions on Iran in exchange for limiting its nuclear program.



The international community expects the United States to impose its sanctions in full on two rounds, the first on August 6 and the second on November 4, forcing many foreign companies to end their dealings with Iran.


The Iranian riyal fell from 98,000 to 112,000 against the US dollar on Saturday, while the exchange rate set by the government was 44,070 riyals against the dollar, compared to 35,186 riyals on January 1.


In May, the United States withdrew from the 2015 agreement between world powers and Iran, which lifted sanctions against Tehran in return for curbing its nuclear program.


Washington decided to re-impose sanctions, accusing Tehran of posing a security threat, and asked countries to halt all imports of Iranian oil as of November 4 or face US financial measures.



US President Donald Trump described the nuclear deal with Iran as one of the worst deals in the world, but in an effort to save it, European partners are preparing a package of economic measures to balance the deal after the US withdrawal.


Experts told The Baghdad Post that the Iranian people are suffering from a sharp deterioration in the standard of living conditions at a time when the regime is wasting public funds on financing terrorist militias in the region, sparking a wave of protests that have continued since last December amid signs of escalating as the economic meltdown continues.

Last Modified: Monday، 30 July 2018 01:29 PM