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Sunday, September 9, 2012

Iran Feels the Heat

As reported today by Lebanon's Daily Star (http://www.dailystar.com.lb/Business/International/2012/Sep-09/187276-iran-currency-dives-to-record-low.ashx#axzz25zH0ygkT), Iran's currency, the rial, has started to unwind:

"Iran's currency on Sunday slid to a new record low against the dollar, with the central bank saying it was trying to manage the plunge amid an 'economic war with the world.'

Street traders were exchanging one dollar for more than 24,000 Iranian rials, according to specialised websites giving real-time rates.

That was a plunge of some five percent over Saturday's rate and around 10 percent since last Wednesday, when President Mahmoud Ahmadinejad admitted on state television that Western sanctions were causing 'problems' in exporting oil and international financial transactions.

The latest street rate was nearly double the fixed, official rate of 12,260 rials that the government reserved for its agencies and a few privileged businesses.

Iran's rial has lost around half its value this year.

. . . .

The depreciation has added to inflation, which the central bank puts at 23.5 percent but which outside observers say is much higher."


The reason for this chaos? Simple. Until recently several of the world's leading banks thought they could play fast and loose with American sanctions against dealing with Iran. This ended when Standard Chartered PLC, the UK's fifth largest bank, agreed in August to pay a $340 million fine to a New York regulator for violating US money laundering regulations involving transactions for Iranian customers.

Meanwhile, HSBC is also being grilled by the authorities in the US and could face fines of up to $1 billion for money laundering activity involving transactions with Iran, Cuba and Sudan.

In short, several of the world's leading banks, which until now had snubbed their noses at the American authorities, are actively engaged in a turnabout having direct implications upon the Iranian economy.

Then, too, given the utter failure of the P5+1 talks with Iran concerning Tehran's nuclear development program, Germany, France and the UK are all calling for harsher sanctions (see: http://www.bbc.co.uk/news/world-europe-19526674), whereas Canada has completely cut its ties with Iran (see: http://www.cbc.ca/news/world/story/2012/09/08/f-iran-canada-diplomatic-relations.html).

All of which will make it increasingly difficult for Iran to supply the Assad regime in Syria and Hezbollah in Lebanon with arms and funds.



2 comments:

  1. "All of which will make it increasingly difficult for Iran to supply the Assad regime in Syria and Hezbollah in Lebanon with arms and funds"
    Oh no, this probably will make life for Iranians who probably were taught to see the purpose of life in supplying the Assad regime and Hezbollah (and the so called anti-Zionist "left") unbearable. What else can humans do with their lives?

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  2. "All of which will make it increasingly difficult for Iran to supply the Assad regime in Syria and Hezbollah in Lebanon with arms and funds."
    The best thing that I've read in quite a while.
    As a minor sidenote,since Cuba was mentioned,aren't we a few decades late in lifting embargos,etc? Why no politician embraces this move,one that would aid the US economy, is beyond me.
    The way of the world,I suppose,where the populace,the vast majority who only want a peaceful life and to provide for their families, is penalized because of the actions of dictators.

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