The value of Iran’s currency the Riyal is falling again. Today its surpassed the 25000 rial to $1 USD mark.
Iranian traders and lawmakers are very unhappy about this as the surge is driving up the cost of imports. This then drives up household expenses as well as production costs at Iran’s factories.
The person who is being blamed is none other than Iranian president Mahmoud Ahmadinejad.
“Unfortunately the government has made the biggest mistake in history by not injecting dollars to answer the demand of the foreign exchange market,” said Iranian MP Mesbahi , according to the Fars news agency. “From three weeks ago the central bank has stopped supplying dollars.”
This is a serious problem. Today the head of the legislative (Ali Larijani) , judicial (Sadegh Larijani – Ali’s brother) , and executive branch (Mahmoud Ahmadinejad) of the government met in Tehran to discuss it.
The Larijani brother will pressure Ahmadinejad as its his responsibility. Its also a good opportunity for them to settle scores with him as they are rivals.
However the bottom line is that the decision not to supply cheap dollars is most probably related to Khamenei and not Ahmadinejad.
Although in theory it is the president’s responsibility, in reality I strongly believe that it’s because of Khamenei’s pressure and instructions the Ahmadinejad government has decided not to release the foreign currency at lower prices, and store it instead.
The strategic reserves of foreign currency are crucial for Iran’s ability to withstand the sanctions.
I strongly believe that if it were up to Ahmadinejad he would have flooded the market with cheap foreign currency in order to push up his falling popularity.
Ahmadinejad is no stranger to this. For years he flooded the Iranian economy with cheap loans in order to increase his standing among the people.