Iran's currency value has kept critical depreciation against foreign currency in the recent weeks. On Wednesday, Iran's rial hit a new record against the U.S. dollars in the street market in Tehran. On the day, one U.S. dollar was exchanged for about 18,000 rials compared to 16,800 rials on Monday, the lowest ever value of Iranian rial.
The new slump in Iran's currency rate comes days ahead of EU foreign ministers' meeting on Jan. 23. The EU foreign ministers are expected to discuss further sanctions on Iran's oil exports. The Iranian currency came under heavy pressure earlier in January after the U.S. sanctions on Iran's Central Bank was announced.
On Jan. 2, one dollar was exchanged for 17,800 rials in the street market in Tehran which showed almost 2,300 rials difference, slightly over 10 percent, in comparison with its rate two days earlier on which one dollar was exchanged for 15,500 rials in Tehran's street market.
On Dec. 31, 2011, U.S. President Barack Obama signed a wide- ranging defense funding bill, calling for new sanctions against financial institutions doing business with Iran's state banking institutions.
The bill, approved by U.S. Congress earlier in December, aimed at reducing Tehran's oil revenues but gives the U.S. president powers to waive penalties as required.
According to an amendment contained in the sweeping bill, foreign financial institutions doing business with Iran's central bank are banned from opening or maintaining correspondent operations in the United States.
The ban only applies to foreign central banks for transactions that involve the sale or purchase of petroleum or petroleum products. The penalties do not go into effect for six months, according to the bill.
On Jan. 3, Iran's Foreign Ministry spokesman Ramin Mehmanparast said that the depreciation of Iran's currency value has nothing to do with recent U. S. sanctions on Iran's central bank.
Mehmanparast said that the slump of Iranian rial against the U. S. dollar is not linked to new U.S. sanctions, adding that new U.S. sanctions have not been put in practice yet. The decline of the value of Iranian currency has other causes and the problem has its roots in economic issues, he said.
During the recent weeks, while the Iranian government has tried to shore up the value of rial by imposing a lower rate, of one U.S. dollar for 14,000 rials in official currency exchange centers, and banned tradings in the blackmarket and as the rial rebounded after the Central Bank announced that it would step in to stabilize the market, the boost in the rial's value started to decline again.
On Wednesday, Iranian Central Bank announced that the currency trading in the balckmarket is illegal and the foreign currency in the possession of the people should be documented, implying that people should receive documents for their foreign currency purchase with the exchange rate and the amount of the traded money written in the documents, the state IRIB TV website reported.
The supervisory deputy of Iran's Central Bank, Ebrahim Darvishi, told IRIB on Wednesday that the foreign currency tradings should be documented and those who are in possession of undocumented foreign currency have to deposit their money in the banks or to sell them at the official rate in the banks before Feb. 4.
Otherwise, the undocumented foreign currency at the hands of its holders would be considered as illegal and as the case of money-laundering, Darvishi was quoted as saying.
The official rate imposed recently on the legal currency exchange centers by Iranian Central Bank is one U.S. dollar for 14, 000 rials which shows over 25 percent difference with the black market figures.
Also, Darvishi told local Mehr news agency on Wednesday that the local police, in different attire other than police uniforms, and some other supervisory agents are tasked to confront those cases of violation of the officially set regulations in the currency market.
On Wednesday, local media reported that a considerable number of illegal currency traders in Tehran's blackmarket were arrested by the local security forces.
Iranian rial has lost over 60 percent of its value against dollar in comparison to its trading value in December 2010, which stood at around 10,700 rials.
In the face of further Western sanctions on Iran's oil exports over the country's controversial nuclear program, the economists say Iran's currency fears more slumps.
Iranian officials has threatened to close the strategic Strait of Hormuz if their oil exports are sanctioned. The Islamic republic heavily relies for its annual revenue on crude exports and its by-products.