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Iran's rial falls to a new low, reports say Iran rial: Mahmoud Ahmadinejad blames slide on 'enemies'
(35 minutes later)
Iran's beleaguered currency, the rial, has fallen to fresh record lows against the US dollar. Iranian President Mahmoud Ahmadinejad has blamed the "enemies" of his country for the sharp falls in its currency, the rial.
It fell a further 9% on Tuesday after Monday's 18% decline, reports say. The currency has fallen to fresh record lows against the US dollar.
Iran's central bank has placed a $5,000 limit on the amount of foreign currency travellers can take in or out. Iranian Industry Minister Mehdi Ghazanfari has blamed speculators for the fall.
President Ahmadinejad has blamed "the enemies of his country" for the sharp falls. The rial has reportedly lost more than 80% of its value since 2011 because of US-led trade sanctions. But US officials say the slide reflects the success of US economic sanctions targeted at Iran's controversial nuclear programme.
Mr Ahmadinejad said Western sanctions amounted to an economic war, but would not stop Iran's nuclear programme. Mr Ahmadinejad said Western sanctions amounted to an economic war, but they would not stop the country's programme.
"We are not people to retreat on the nuclear issue," he told a news conference in Tehran. "If somebody thinks they can pressure Iran, they are certainly wrong and they must correct their behaviour," he said. "We are not people to retreat on the nuclear issue," he told a news conference in Tehran. "If somebody thinks they can pressure Iran, they are certainly wrong and they must correct their behaviour."
Recent moves by Tehran to ensure key importers can buy dollars at a cheaper rate is said to have worsened matters. The central bank has placed a $5,000 (£3,100) limit on the amount of foreign currency travellers can take in or out of Iran.
The rial has reportedly lost more than 80% of its value since 2011 because of US-led trade sanctions.
Experts say several factors are at work. The main underlying one is the impact of Western financial sanctions. Iran's foreign currency income from oil exports has been squeezed. With fewer dollars in the system, their value relative to the local currency has gone up.
In addition, nervous Iranian savers have rushed to swap their rials for hard currency dollars, further exacerbating the pressure on the Iranian currency.
And then there is the Tehran government's faltering policy response. Longstanding measures designed to hold up the value of the rial appear to be breaking down.
In the past, importers of food, medicines and other priority areas have been supplied dollars at much lower than market rates.
The scope of these arrangements has been cut back, which means previously favoured importers are now scrambling to acquire dollars on the open market, driving the price of those dollars even higher.
Reports from Tehran suggest the rial plunged 18% in Monday's trading and then another 9% on Tuesday.
Since the start of the year, the currency has lost four-fifths of its value, says the BBC's Mark Gregory.
'Security move''Security move'
The US-led sanctions are being imposed on Iran because of the country's disputed nuclear programme. The US accuses Iran of aiming to build nuclear weapons, while Iran counters that it simply wishes to develop nuclear power stations.The US-led sanctions are being imposed on Iran because of the country's disputed nuclear programme. The US accuses Iran of aiming to build nuclear weapons, while Iran counters that it simply wishes to develop nuclear power stations.
The sanctions, which are backed by the European Union, include a ban on the purchase of Iranian oil.The sanctions, which are backed by the European Union, include a ban on the purchase of Iranian oil.
The US has also threatened to take action against foreign firms and institutions dealing with the Iranian central bank.The US has also threatened to take action against foreign firms and institutions dealing with the Iranian central bank.
While Iranians are said to be scrambling to convert their rials into hard currency, thereby adding to the downward pressure on the rial, the government has blamed speculation by money changers.While Iranians are said to be scrambling to convert their rials into hard currency, thereby adding to the downward pressure on the rial, the government has blamed speculation by money changers.
According to the Iranian Fars news agency, Iran's Minister of Industry, Mines and Trade, Mehdi Ghazanfari, said: "We have greater expectations that the security services will control the branches and sources of disruption in the exchange market. According to the Iranian Fars news agency, Mr Ghazanfari said: "We have greater expectations that the security services will control the branches and sources of disruption in the exchange market.
"Brokers in the market are also pursuing the increase in price, because for them it will be profitable, and there is nobody to control them.""Brokers in the market are also pursuing the increase in price, because for them it will be profitable, and there is nobody to control them."
On Tuesday, the rial was said to be trading in Iran at about 37,500 to the dollar, down from around 34,200 late on Monday. On Tuesday, the rial was said to be trading in Iran at about 37,500 to the dollar, down from about 34,200 late on Monday.
The rial is not traded on the global currency markets, so it is not possible to produce accurate figures for its value.The rial is not traded on the global currency markets, so it is not possible to produce accurate figures for its value.
The weakness of the rial has harmed the wider Iranian economy, as it means the country cannot afford to import as many foreign goods and raw materials which are priced in hard currencies. The weakness of the rial has harmed the wider Iranian economy, as it means the country cannot afford to import as many foreign goods and raw materials which are priced in hard currency.
'Inefficiency'
Amir Paivar, a business reporter at BBC Persian, said that as a result of the tightened trade sanctions, Iran's income from oil exports had fallen by 45% this year, causing the shortage in dollars and other hard currencies.
He added that Iranian authorities had for many years used the country's abundant oil earnings to keep the rial artificially high.
With oil revenues now sharply reduced, our reporter said that both the government and the central bank now seemed unsure how to react.
He added: "Iran's years of state intervention in the artificial appreciation of the rial, thanks to abundant petro-dollars, has turned the currency into a barrel of gunpowder now detonated by sanctions.
"At a time of crisis, President Mahmoud Ahmadinejad's government is plagued by inefficiency, mismanagement and a domestic power struggle."
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