Iran’s rial rallies 13% since December on Trump departure

The currency has strengthened on the prospect of improved relations with the US and Washington's return to the nuclear deal

Iranian rial banknotes on display at a currency exchange in Tehran, Iran. The currency has plunged more than 70% in the wake of tougher US sanctions by the outgoing administration of former president Donald Trump. Getty ImagesShow less

Iran’s currency rallied 13 per cent since the beginning of December on the prospect that relations with the US will improve under President Joe Biden.

The US dollar on Iran's open market was down to 228,500 rials on Wednesday compared with 262,500 on December 1, 2020, according to currency trading website Bonbast.com.

The rial has gained about 11.5 per cent since January 6 when a joint session of the US Congress convened to count and confirm the results of the Electoral College, which declared Mr Biden as president. The official exchange rate is 42,000 rials per dollar.

The Iranian currency lost more than 70 per cent of its value during the term of former US president Donald Trump. Mr Trump's administration unilaterally withdrew from a nuclear accord that places limitations on Iran's nuclear enrichment capabilities and imposed numerous sanctions on Iran that led to rising inflation and limited its ability to trade.

In addition to tougher US sanctions, the coronavirus, fluid oil prices and a slump in the global economy deepened Iran's economic crisis, aggravating the country's banking crisis. The country has the highest death toll in the Middle East from the pandemic.

Mr Biden, who served as vice president under former US president Barack Obama, whose administration along with Russia, China and three European countries, negotiated the nuclear agreement with Iran, has said he wants to rejoin the accord on condition Iran returns to compliance.

On Wednesday, as Mr Biden was being sworn in, Iran's President Hassan Rouhani urged the new US administration to return to the 2015 nuclear agreement and lift sanctions on Tehran.

"The ball is in the US court now. If Washington returns to Iran's 2015 nuclear deal, we will also fully respect our commitments under the pact," Mr Rouhani told a televised Cabinet meeting.

"Today, we expect the incoming US administration to return to the rule of law and commit themselves, and if they can, in the next four years, to remove all the black spots of the previous four years," he said.

The Tehran Stock Exchange’s main index has been fluid throughout the past year. The benchmark has plunged 42 per cent since August, when it broke through the 2 million threshold. On January 18, the TSE’s main index, the TEDPIX, fell 36,989 points to 1.149mn. That followed a 6.5 per cent drop the previous week.