Iran imposes currency controls after rial plunges to new record low

Currency traded at 500,000 to the US dollar on the unregulated, open market on Monday

Exchange rates at a currency shop in Tehran. A rush on euros and dollars weakened the rial against the greenback. AFP

Iran has introduced new restrictions on foreign currency sales after a rush on euros and dollars weakened the rial to a record low of 500,000 against the greenback.

The Central Bank of Iran scrapped a programme that allowed people to buy up to €5,000 ($5,324.3) a year from authorised sellers and replaced it with a more stringent annual allocation of €500 for air passengers, the semi-official Tasnim news agency reported.

The move, which became effective on Tuesday, came after foreign exchange sellers in central Tehran became inundated with customers seeking to purchase their annual allotment of euros as the end of the current Iranian calendar year nears.

The rial, which has hit successive record lows since the US abandoned the nuclear deal in 2018, touched a new low of 500,000 against the US dollar on the unregulated, open market on Monday, according to several traders in Tehran.

The latest currency turmoil comes as the heavily sanctioned leadership of the country faces unprecedented levels of public dissent and is increasingly isolated from the global economy.

Talks with world powers to revive the nuclear deal, which would loosen sanctions on vital oil exports, also remain indefinitely stalled and inflation has reached near-record levels over the past year.

There were scuffles outside one exchange office around noon on Monday as people tried to push past security guards.

One man was seen restraining another customer by the neck as they jostled while waiting in line.

Late on Monday, Iran's central bank also announced a “new package for the dollar” inspired by Russia’s efforts to defend the rouble and support its value after it was hit with sanctions over its invasion of Ukraine.

The package involves the regulator holding on to foreign currency revenue accrued from exports in industries such as mining that have access to heavily subsidised fuel, Tasnim reported.