Iran Says Dollar Rate Vs. Rial to Weaken; Chamber Links Sanctions, Trading

The Iranian Central Bank said the U.S. dollar will slide to a “market rate” of 10,600 rials by next week, following a report by Tehran’s Chamber of Commerce that international sanctions on the country’s nuclear program may have prompted banks to halt trading in its currency.

“The dollar price will definitely go back to normal by next week,” Central Bank Governor Mahmoud Bahmani was cited as saying by the state-run Mehr news agency today.

The “market rate” is 12,100 rials today, according to the economic newspaper Donya-e Eqtesad. Today’s official rate is 10,198 rials, according to the Central Bank’s website. The lowest official dollar-rial rate in the past year was 9,834 on March 18, while the highest was 10,507 on June 7, according to the bank’s website.

Mehr yesterday cited Vice President Mohammad Reza Rahimi as saying the Central Bank will offer buyers unlimited amounts of foreign currency and gold starting today, as prices rose.

“Some see the surge in the foreign currency market as being linked with the global market but other reports say the issue is linked with the strenthening of sanctions against Iran,” the Chamber of Commerce said in a report published yesterday on the organization’s website.

Two State Banks

“In the past few days, the United Arab Emirates’ central bank has almost halted the currency exchanges of two Iranian state banks that have branches in Dubai, Melli Bank and Saderat Bank," Pedram Soltani, a Chamber of Commerce member, was cited as saying in the report. "They are now seriously being controlled and their currency trading has almost stopped. A large part of Iran’s currency exchange took place via these banks.”

Banks in Iran refused to sell foreign currency today, with the exception of a few branches that sold a maximum of $500 at a rate of 10,500 rials to travelers who showed they had airline tickets and passports, Agence France-Presse reported.

Iran is under sanctions by the United Nations, the U.S. and the European Union over its refusal to curtail its nuclear program. The U.S. and many of its allies allege the program is cover for weapons development, which Iran denies.

To contact the reporters on this story: Ali Sheikholeslami in London at alis2@bloomberg.net; Ladane Nasseri in Tehran at lnasseri@bloomberg.net.

To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net.

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