Skip to main content

How Iran’s quasi-state firms intensify currency crisis

The clash between the Rouhani administration and Iranian petrochemical companies over foreign currency earnings is another chapter in the battle between the government and quasi-state actors.
A security personnel stands in front of the Mahshahr petrochemical plant in Khuzestan province, 1032 km (641 miles) southwest of Tehran, September 28, 2011. REUTERS/Raheb Homavandi  (IRAN - Tags: BUSINESS ENERGY INDUSTRIAL) - GM1E79T0EIF01

While many observers ascribe the weakening of the Iranian rial in recent months to the psychological impact of increasing US pressure on Iran, the currency crisis has domestic roots, too. Indeed, the partly privatized Iranian economy has given birth to a web of interest-driven relations between those in power and those with wealth.

Since late 2017, when the drop in the rial’s value first began accelerating, the administration of President Hassan Rouhani has desperately tried to control the whereabouts of billions in hard currency earned by major quasi-state exporters. Their wide profit margin is guaranteed by incentives they receive from the government. Yet these same companies act based solely on their own interests, which are entangled with the interests of some policymakers.

Access the Middle East news and analysis you can trust

Join our community of Middle East readers to experience all of Al-Monitor, including 24/7 news, analyses, memos, reports and newsletters.


Only $100 for annual access.