Iran studying strengthening Rial versus US Dollar

IRAN. Iran is considering strengthening the Rial currency against the US Dollar, a newspaper said on Sunday, citing the acting Economy Minister.Iranian media have in the past reported that Tehran was studying the possibility of raising the value of the Rial to fight steadily climbing inflation, now running at an annual 26%, but a central bank official denied it in January.IRAN. Iran is considering strengthening the Rial currency against the US Dollar, a newspaper said on Sunday, citing the acting Economy Minister.

Iranian media have in the past reported that Tehran was studying the possibility of raising the value of the Rial to fight steadily climbing inflation, now running at an annual 26%, but a central bank official denied it in January.

The Donya-e Eqtesad business daily carried comments by acting Economy Minister Hossein Samsami on Sunday, saying he was asked about “reports” that the value of the US Dollar to the Rial, now at IRR 9,300, would be reduced by nearly half.

“The amount in this drop in value [of the US Dollar to the Rial] has not been finalised and is at the technical studies stage. Therefore, one cannot give an opinion in connection to the final figure,” Samsami was quoted as saying.

Asked whether a stronger Rial would make Iranian exports more expensive, he said a large part of the country’s goods sold abroad were not priced in the US currency, but he also suggested dollar-dependent exports could receive incentives.

Iran, the world’s fourth-largest crude producer, is reaping windfall gains from the high oil price on world markets.

But economists say lavish spending of this influx of petrodollars, estimated at about US$70 billion in the 2007-2008 Iranian year, has also fuelled consumer price rises.

The government of President Mahmoud Ahmadinejad, expected to stand for re-election next year, has come under fire from lawmakers and the public over failure to tackle the problem.

Ahmadinejad, whose government is also under Western pressure over Iran’s disputed nuclear programme, has blamed rising inflation on factors including Iran’s dependence on imports and the US Dollar, which has declined in value on world markets. 

Iran’s ISNA news agency in January said officials were evaluating an idea to raise the Rial’s value to IRR 7,000 against the US Dollar, but a central bank official then ruled this out.

Central bank officials were not immediately available for comment on Sunday