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25 weaker than ever seen before, trading at levels beyond IRR90,000 to the dollar on the unofficial market. Tension over the situation on June 25 resulted in some rare street unrest in Tehran , with merchants in the capital’s Grand Bazaar shuttering their shops to join angry demonstrations.
The evolving situation indicates Tehran is moving back towards running a “resistance economy” designed to conserve foreign exchange reserves and attain as much self-sufficiency as possible in the manufacturing of products.
The Rouhani government has lashed out at certain regional countries—a phrase commonly taken to particularly refer to regional arch-rival Saudi Arabia—as well as unspecified groups inside the country said to be fanning the flames of the stark currency depreciation. Hardline newspaper Kayhan , a title supported by the Iranian Supreme Leaders’ Office, referred to those inside the country said to be conducting currency manipulation as “traitors”.
Mohammad Shariatmadari, Iran’s industry, mines and business minister, announced that the import bans would apply to a wide variety of items including cars, vans, tractors, powdered milk, bras, cookers, cameras and even musical instruments. Fast moving consumer goods (FMCG) items such as tea bags, ketchup, soap and even pencils are also on the list.
The Iranian authorities are hunkering down for further blows to the rial in coming days, with the US continuing to ramp up pressure on any country or company trading with Iran in the wake of its May 8 decision to unilaterally abandon the nuclear deal. The US Treasury Department has given foreign businesses wind-down periods so that they can resolve the status of their operations before sets of sanctions are implemented in August and November.
Since January 1, the IRR has lost 109.7% in its value against the US dollar, according to Bonbast.com, a site which tracks hard currencies.
Nearly all prices of imported goods have roughly doubled over the period. Iranian consumers’ eyes have watered at the sight of new price tags on electronics and vehicles. For instance, the cost of a new Hyundai Elantra small sedan, assembled in Iran, hit IRR3.45bn (€32,900 at the June 25 unofficial exchange rate), double the original price it was marketed for when it made its market debut last year.
Last week, Iranian deputy minister of industry, mines and business Mojtaba Khosrotaj said that the government was freezing import market channels at the instruction of Supreme Leader Ayatollah Ali Khamenei in order to support local production.
“Imports of some goods will be restricted by increasing customs duties while certain other goods will be altogether banned from imports,” Khosrotaj, who also acts as chairman of the Trade Promotion Organization of Iran (TPO), was quoted as saying by IRNA.
8 IRAN Country Report July 2018 www.intellinews.com