September 27-2013
The rial, which improved dramatically immediately after Hassan Rohani won the June presidential election, has improved yet further in recent days with expectations high that he will make a deal with the United States that will end sanctions.
The cost of a dollar fell below 30,000 rials and the price of a euro fell below 40,000 rials this past weekend for the first time since the rial’s collapse one year ago this week.
The dollar was selling in Tehran for 32,000 rials as recently as September 11. As of Tuesday, the price was 29,400 rials, according to the website Nerkh-e Roozane, which tracks foreign exchange daily. That was an increase in value of 8.1 percent.
On June 13, the day before the presidential election, the dollar cost 36,250 rials. Within one week the price was down to 32,000 rials. Since then, the dollar price has snaked between 31,000 and 33,000 rials, until last Thursday when it fell below 31,000—and kept on falling.
Since Rohani was elected, the rial has strengthened 19 percent against the dollar. Since the revolution, the rial has periodically plunged by huge percentages only to recover in days. This is the first time the post-revolution rial has ever shown sustained improvement over months.
The common wisdom in Tehran holds that the improvement is the direct result of high expectations for Rohani’s visit to the United Nations this week. In other words, the improvement is the result of psychology, not economics.
That suggests the strengthening of the rial will not continue unless there are positive developments in New York and unless the upcoming talks Iran will have with the International Atomic Energy Agency (IAEA) and later with the Big Six on its nuclear program show progress.