Iran scrambles to ease inflation as rial's value plummets

Tehran blames 'foreign plotters' for undermining the country's economy

Iranians at the old grand bazaar in Tehran. AP Photo
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Iran’s inflation crisis showed no sign of ending on Sunday as the dollar sold on the unofficial market for 601,500 rials, up from 540,000 on Friday.

On Monday morning, Iran's state-linked Press TV said the rate had dropped to 550,000 against the dollar after central bank intervention, involving “a new foreign exchange centre which helped satiate demand for hard currencies.”

But the overall picture is gloomy, with the rial having lost 50 per cent of its value since nationwide protests in mid-September, which led to strikes in the energy sector and the country's steel industry, as well as rising international isolation.

Protests initially flared up in Kurdish-majority areas after the death of Mahsa Amini, a 22-year-old who died in police custody after being detained for wearing her hijab “inappropriately. But demonstrations soon spread to Tehran and Sunni majority parts of the south, uniting a broad spectrum of secular opposition groups and minorities.

Western sanctions remain in place after Iran raised its enrichment of uranium to levels that could allow it to create a nuclear bomb. Europe and North America have also imposed new sanctions on the regime following the killing of hundreds of protesters and the jailing of tens of thousands in the recent unrest.

Iran has also faced fresh sanctions for supplying one-way attack drones, also known as Kamikaze drones, to Russian forces in Ukraine. Europe and the US have spent nearly $130 billion on assistance for Ukraine since Russia’s invasion a year ago, and have reacted angrily to Iran’s growing military partnership with Russia.

Iranian authorities have blamed the currency's fall on “the enemies' plot” to destabilise the country, repeating a common government line that the economy is being undermined by foreign saboteurs.

Faced with the prospect of further economic hardship, Iranians have been turning to dollars and other hard currencies, or gold, to protect their savings amid high prices and inflation above 53 per cent.

Updated: February 27, 2023, 12:33 PM