Iranian government plans exports platform to counter ‘economic war’

Iranian government plans exports platform to counter ‘economic war’

The measure comes as Iran is trying to prop up its national currency, the rial, which has sunk to record lows in the face of new US sanctions and panic buying of foreign currencies by some citizens.

The Iranian government has finalized a directive under which exporters would have to sell their foreign currency earnings on an online trading platform administered by the state.

The aim is to channel more foreign currency earnings into the country following media reports that major exporters such as Iran’s petrochemical companies were not repatriating large sums of their earnings.

Economy and Finance Minister Farhad Dejpasand was quoted as saying that the new plan would help the government deal with hostile US measures which state officials have characterized a full-fledged “economic war”.

While the directive has been finalized, the government should send it to parliament for approval first.

The value of the rial has gone from strength to strength after Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei ordered the central bank this month to protect the national currency. 

Over the week, the rial has jumped to trade in the range of 96,000 to 100,000 to the dollar threshold.

In September, the Iranian currency reached an all-time low of 190,000 rials against the dollar after months of steep declines that saw the currency falling more than five-fold.

Rial’s slump disrupted Iran’s foreign trade and helped boost annual inflation fourfold to nearly 40% in November. 

Strengthening the rial is crucial to the government’s push to bring down inflation, improve living standards and reduce capital flight.  

Iran’s central bank is now supplying large amounts of dollars to the market, with its governor Abdolnaser Hemmati saying the bank would do everything in its power to obey the Leader’s order.

Media reports have been reporting long queues outside foreign exchange shops selling their dollars, while initial fears about the sanctions have subsided.

The turmoil, according to economists, is being stoked by speculators but the state’s campaign against economic crimes, combined with Ayatollah Khamenei’s order to strengthen the rial, has made them more wary of bidding the rial lower.

Last month, two men convicted of economic crimes were executed. They were accused of manipulating the currency market.

US news magazine Foreign Policy wrote this month that the currency market turmoil in Iran was mostly stoked and tended by social media networks, mostly messaging applications.

According to the publication, most speculators were using the messaging app Telegram to spread fake news about the rial.

Prior to the US withdrawal from the nuclear deal, one US dollar was trading at 37,000 rials but immediately afterwards, it jumped to around 44,000 rials and then 190,000 within a matter of few weeks.

Professional money traders took advantage of the situation to use Telegram to exploit the black market’s lack of transparency to maximize their own profits, at the expense of their clients.

The Iranian government doesn’t censor Telegram, specifically the news feeds on its “channel” function which allow posts to be distributed to anyone who chooses to sign up for them.

“When the rial entered its ominous trajectory, currency traders began creating hundreds of channels on Telegram, instantly announcing any shifts in the dollar price and offering broader market and purchasing advice for the coming days,” FP said.

Those channels attracted a massive army of followers, with some feeds counting in excess of 2 million members, who have themselves become a force capable of influencing the currency exchange rate.

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