Maryam Sinaiee

The United States dollar rose against the rial on the Iranian foreign-exchange (forex) market on Monday [November 9] after four consecutive days of weakening. Many buyers and small investors, expecting even lower rates after Joe Biden’s projected victory in the US presidential election, were bewildered.  

The dollar in the open market dropped to around 225,000 rials on November 4 but recovered on Monday to around 270,000 rials.

Government-authorized exchange bureaus sold the dollar a bit cheaper to licensed importers and organizations -individuals can buy a maximum of $2,000 in one year at these rates and need to register their social security number. But social media reports indicated very little trading taking place at their advertised rate of 245,000 rials to the dollar.

Social media reflected uncertainty and rampant rumors in the forex market as the trend in the past four days was reversed. Many Twitter users on Monday morning reported a halt in trade in some foreign-exchange bureaus in Tehran’s Ferdowsi Avenue, the capital’s forex trading heart. “My friend has been to more than ten authorized exchange bureaus to buy at the rate of 245,000 that their boards showed. None had any to sell,” one wrote.

Speculations about continuing controversy over US election results and its impact on the exchange rate have fueled the rumor-mill. “The BBC, CNN and ABC have taken down Biden’s electoral votes to 279 from 290,” came one Tweet. The tweet included screenshots of media outlets’ updated forecasts for the US electoral college after the narrowing margin of popular votes in Arizona led to a downward revision of Biden’s strength in the electoral college that chooses the president.

The uncertainty prompted chaotic attempts by customers trying to buy or sell one or other currency. Some Twitter users posted pictures of long queues of sellers in front of Tehran exchange bureaus on Monday morning.

“Everybody wants to sell but there’s no buyer,” wrote one alongside a photo of the board showing the official buying and selling rates in the window of an authorized exchange bureau. Another user claimed that an exchange-bureau owner in Tehran had told him government agents were buying at the lower rates only to sell it back to them at higher rates to help the government’s fiscal deficit.

The Iranian media have offered various explanations for the loss of the value of the Iranian rial after days of gaining strength. Many experts had already advised caution and pointed out that rial’s rise in reaction to the US election results would be temporary and that the longer-term rate would reflect realities on the ground.

“We need to keep in mind that the dollar may have fallen [against the rial] temporarily, but inflation still has a strong presence in [the Iranian] economy and we should expect the dollar to rise again if a remedy is not found for inflation,” Kazem Jalalitalab, a financial expert, was quoted by Young Journalists Club (YJC) as saying on Sunday.

The falling Iranian national currency reached the milestone of 300,000 rials to the dollar on October 1, marking a ten-fold fall in the three years since Trump indicated he would withdraw from the nuclear agreement and impose sanctions on Iran. Draconian third-party sanctions on Iran’s oil exports have deprived the government of its major foreign-currency revenue source. With a 50 percent budget deficit, the Central Bank of Iran has had no choice but print money, further devaluing the currency and feeding inflation.