Hossaini apparently did not see the humor in this since President Ahmadi-nejad two years ago campaigned against the dollar, saying it was a failed currency that would soon disappear. He made numerous speeches along those lines to explain his announced plan to sell off all of Iran’s dollar holdings and buy other foreign currencies like the euro and the yen instead.
Actually, that shift was driven by the US banking restrictions, which made it hard for Iran to operate in dollars and forced it to shift to other currencies—a point Ahmadi-nejad never admitted.
Hossaini argued that the dollar and gold had now risen too high and were overpriced. “Foreign currencies and gold coins will drop, so those who buy at a high price must not complain later,” Hossaini said. Many economists in Tehran say there is so little trust in the rial that Iranians are flocking to other currencies, especially the dollar since the euro appears imperiled to many, to stash their savings.
Under pressure from Ahmadi-nejad to make bank loans available cheaply to the public, the interest earned on deposits is now lower than the inflation rate, meaning those who make rial deposits in Iran are losing value every day.
The official bank selling rate for dollars has been abnormally erratic in recent months. Over the last 90 days, the bank rate has bounced around between 10,500 and 10,900. On the free market it has periodically surged well-passed 13,000 for brief periods.