This curious development has produced much head scratching.
The rial isn’t just doing well against the dollar; it is doing even better against the euro.
Here are the numbers showing the posted price of the dollar and euro on June 7, the last day before the devaluation, June 8, the day of the devaluation, and July 12, the most recent figures before the Iran Times went to press.
USD Euro
June 7 10,599 15,467
June 8 11,717 17,180
July 12 10,568 14,748
The dollar now costs 31 rials or 0.3 percent less than before devaluation. The euro now costs 719 rials or 4.6 percent less than before devaluation.
Jahangir Amuzegar, a Washington-based economist and former member of the Executive Board of the International Monetary Fund, dismisses the exchange rates as political fiction.
“The daily value of the rial in US dollar terms—or vice versa—in the streets is not market determined, and does not follow normal economic factors determining the exchange rate in Western countries, i.e., interest rates, trade balance, inflation, government fiscal position, etc.,” Amuzegar told the Iran Times.
“The rial value—or the exchange rate—is mainly determined by the Central Bank—as the nearly monopolistic holder of dollars in the country—through its daily market interventions. What you see daily in the bazaar is what the CB wants you to see, period.”
The Central Bank has reportedly been pumping huge sums of dollars into the market in recent years to restrain the price of the rial and make it look better than it would in a normal market.
That leaves the devaluation of last month an anomaly.
The economic daily, Donya-e Eqtesad, said the proposal to drop zeros from the currency would have to be approved by the Majlis.