A.Davey via flickr
In January, one dollar was worth 43,000 riyals in the shadow market. On Tuesday, August 28, however, it was already 107,000 rials. The official rate for this period fell from about 36,000 to 42,000 rials/$. In an attempt to stop weakening of the currency, Tehran got into the game of cat and mouse with currency traders who work illegally at stores and through messengers.
In December, large-scale protests over economic problems began in Iran, but the government managed to suppress them. In recent months, the fall in the rate of rial has again provoked discontent among the population against the backdrop of rising prices. As a result, in July, the chairman of the central bank of Iran lost his post, and the ministers of labor and economy were dismissed in August. On Tuesday, President Hassan Rouhani himself had to answer the parliament's questions about economic problems and weakening of the national currency.
In February, after the rate of rial resumed the fall, the authorities arrested dozens of currency traders. In April, the government declared illegal trade in courses, which are very different from the official one. Because of this, currency trading has largely gone underground.
The US withdrawal from the international agreement on Iran's nuclear program in May caused further weakening of the rial. The agreement was concluded in 2015 and released Tehran from many sanctions, but President Donald Trump believes that it did not change Iran's behavior in the Middle East. In August, Trump again imposed sanctions against Tehran, including restrictions on operations with rial. In November, a new block of sanctions will enter into force, including a ban on the import of Iranian oil and transactions involving the central bank of Iran. Now experts expect a recession in the Iranian economy in 2019.
In an attempt to suppress the shadow market, Tehran eased restrictions on currency exchange. In July, a new secondary foreign exchange market was opened for small importers and exporters who want to trade in currencies at market rates. In August, the authorities canceled the ban on currency exchange at unofficial rate. Yet, some restrictions remain, for example, the number of dollars that can be issued to customers. According to one of the shadow market participants, in recent weeks the activity there has decreased. But he explains this by a decline in demand due to a record high dollar rate.
Meanwhile, the government continues to struggle with currency traders. The police arrested five people on August 5 on charges of financial crimes, and another 67 people were charged with economic crimes a week later.
Currency traders try not to conduct transactions through their own bank accounts. Instead, they use the accounts of restaurants or shops that perform many operations. Those who use Telegram and WhatsApp are also very careful: they agree to work with only trusted clients after a telephone conversation, during which they try to identify agents of special services.
Many traders continue to work clandestinely. At the same time, the country’s foreign exchange market is constantly changing, notes owner of Bonbast.com, who publishes unofficial courses. "Today it can be a respected business, and tomorrow there is a threat of "national security", because of which large traders can be arrested and sentenced to death," says the website owner, who asked not to disclose his name.
source: wsj.com
In December, large-scale protests over economic problems began in Iran, but the government managed to suppress them. In recent months, the fall in the rate of rial has again provoked discontent among the population against the backdrop of rising prices. As a result, in July, the chairman of the central bank of Iran lost his post, and the ministers of labor and economy were dismissed in August. On Tuesday, President Hassan Rouhani himself had to answer the parliament's questions about economic problems and weakening of the national currency.
In February, after the rate of rial resumed the fall, the authorities arrested dozens of currency traders. In April, the government declared illegal trade in courses, which are very different from the official one. Because of this, currency trading has largely gone underground.
The US withdrawal from the international agreement on Iran's nuclear program in May caused further weakening of the rial. The agreement was concluded in 2015 and released Tehran from many sanctions, but President Donald Trump believes that it did not change Iran's behavior in the Middle East. In August, Trump again imposed sanctions against Tehran, including restrictions on operations with rial. In November, a new block of sanctions will enter into force, including a ban on the import of Iranian oil and transactions involving the central bank of Iran. Now experts expect a recession in the Iranian economy in 2019.
In an attempt to suppress the shadow market, Tehran eased restrictions on currency exchange. In July, a new secondary foreign exchange market was opened for small importers and exporters who want to trade in currencies at market rates. In August, the authorities canceled the ban on currency exchange at unofficial rate. Yet, some restrictions remain, for example, the number of dollars that can be issued to customers. According to one of the shadow market participants, in recent weeks the activity there has decreased. But he explains this by a decline in demand due to a record high dollar rate.
Meanwhile, the government continues to struggle with currency traders. The police arrested five people on August 5 on charges of financial crimes, and another 67 people were charged with economic crimes a week later.
Currency traders try not to conduct transactions through their own bank accounts. Instead, they use the accounts of restaurants or shops that perform many operations. Those who use Telegram and WhatsApp are also very careful: they agree to work with only trusted clients after a telephone conversation, during which they try to identify agents of special services.
Many traders continue to work clandestinely. At the same time, the country’s foreign exchange market is constantly changing, notes owner of Bonbast.com, who publishes unofficial courses. "Today it can be a respected business, and tomorrow there is a threat of "national security", because of which large traders can be arrested and sentenced to death," says the website owner, who asked not to disclose his name.
source: wsj.com
