Deputy Gholam-Reza Mesbahi-Moqaddam, chairman of the Majlis Planning and Budget Committee, said the bank cut off the supply of dollars three weeks before the collapse September 10.
“Unfortunately, the government made the biggest mistake in its history by not injecting dollars to answer the demand of the foreign exchange market,” Mesbahi-Moqaddam said just after the rial plunged. “The Central Bank stopped supplying dollars three weeks ago.”
In an interview with the Mehr news agency one week before the rial’s latest collapse, an unnamed Iranian importer said the government had not been providing subsidized dollars for essential imports for two weeks. As a result, he said, goods were stuck in customs warehouses.
The subsided dollars for essential imports are sold for 12,260 rials per dollar. On the open market, dollars sold for around 19,000 rials in July, then climbed up to 22,000 rials during August and leaped passed 25,000 rials on September 10. In recent days, the price has been between 24,000 and 25,000.
The government does not seem to have a foreign exchange policy any more. On August 10, Central Bank Governor Mahmud Bahmani announced that the official rate of 12,260 rials to the dollar would be revised within 10 days. It wasn’t. On September 9, Bahmani said the rate of 12,260 rials would remain unchanged. “The reference exchange rate for essential goods will not rise and, without a doubt, it will remain at the same 12,260 rials per dollar,” Bahmani said, contradicting his proclamation of four weeks earlier.
Bahmani complained that some importers had been buying goods at the subsidized rate and then selling them to the public as if these goods had been bought at the open market rate.
But Bahmani did not explain the shutdown of dollar sales at the subsidized rate, even for a brief period. That prompted speculation that the government is running short of dollars, a line of thought that can only lead to a further slide of the rial.
At the end of last year, Iran had $106 billion in official foreign exchange reserves according to the International Monetary Fund. That would be sufficient to cover 13 months of imports in normal times.
When the rial surged passed the 25,000 mark, the government sought to stop news of that from circulating. Agence France Presse reported that text messages containing the word “dollar” in English or Farsi were intercepted and not transmitted to the addressee. It said the Farsi word for “foreign money” was also blocked. But it reported that “USD,” “euro” and “$” went through unimpeded.
The government implemented a similar censorship of text messages in January when the rial also plunged in value.
