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Iran signals change to FX regime, crackdown on profiteering

The Iranian authorities said renewed turbulence on foreign exchange markets will be short-lived as signals were sent that a crackdown on profiteering is ahead.
Iranian rials, U.S. dollars and Iraqi dinars are seen at a currency exchange shop in Basra, Iraq November 3, 2018. Picture taken November 3, 2018. REUTERS/Essam al-Sudani - RC18BD110300

Hours before the United States designated the Islamic Revolutionary Guard Corps (IRGC) a Foreign Terrorist Organization (FTO) on April 9, worries about renewed economic pressure sparked a fresh plunge in the value of Iran’s national currency. In a matter of 24 hours, the rial lost around 7.5% of its value. Hovering near 145,000 rials against the greenback, worries were fueled of yet another wave of inflation. Many ordinary Iranians, whose purchasing power has dwindled in the past 14 months, once again rushed to money changers and quickly formed long queues in central Tehran.

But the governor of the Central Bank of Iran promptly moved to ease such concerns, assuring the public that the new jump would not last long. According to Abdolnasser Hemmati, the US measure to brand the IRGC as an FTO would be of "no fundamental economic impact" and the Central Bank was closely watching the market. "What has created the turbulence these days is only a psychological factor," Hemmati added.

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