(Persia Digest) – The currency exchange rate has been fluctuating sharply on the Iranian market over the past few months. Although this had remained fairly stable during President Rouhani’s first term in office, the price of the dollar and other foreign currencies rose sharply in the past weeks, depreciating the Iranian rial by up to 25 percent.
Dr Hossein Raghfar, Professor of Economics at Al-Zahra University in Tehran, talked to Persia Digest in an interview about the main reason for rising dollar rates over the past few months in Iran: “The main reason for the rising price of dollar is a budget deficit which prompted the government to increase the exchange rate.”
He added: “The problem, however, was that a lot of wandering resources poured into the foreign exchange market so that the government was unable to manage the situtation.”
The excessive appreciation of currency in the past weeks prompted the government to ask for police help in calming the market by arresting certain profiteers. The Head of the CBI supported police intervention and stressed that encountering economic disruptors in the world is common practice.
Raghfar told Persia Digest that police presence on the currency market “Is an indication of severe economic damages and government inability to implement its monetary and economic policies to control currency fluctuations.”
He continued by saying that the consequences of such a presence will only deepen the distrust of economists in the government's economic policies. In addition, an onslaught by people on the currency market is indicative of the distrust by the private sector of monetary policies in the country, only exacerbating the situation.