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Iran’s Currency Plunge 10% After Fresh US Sanctions

Economy Watch [1]
January 3, 2012

The Iranian Riyal fell to a record low against the US dollar on Monday, after fresh US sanctions imposed severe penalties and restrictions on foreign financial institutions that had dealing with the Iranian central bank.

Late on Monday, Iran’s currency exchange rate was hovering at around 17,800 riyals to the US dollar, as compared to Sunday’s rate of 15,900 riyals to the dollar. This marked a more than 10 percent slide in the value of the riyal in just one day, and was a significant drop-off in its value since trading at just 10,500 riyals to the US dollar back in December 2010.

The drastic one-day slump was blamed on a new bill signed by US President Barack Obama on Saturday, which included an amendment barring foreign financial institutions that do business with Iran’s central bank from opening or maintaining correspondent operations in the United States.

In all, the riyal has lost more than a third of its value since September 2011, with the Associated Press reporting that Iran’s central bank has since called on Iranian experts to meet this Wednesday to discuss the turbulence in the currency market.

Full article here [1]