| Kippreport.com

Iran’s Rial dives to historic low

September 30, 2012 9:16 by Reuters

The Iranian rial slumped on Saturday to a historic low against the U.S. dollar, according to Iranian media and currency tracking websites.

The rial fell by 3.6 percent and was trading at about 27,900 per dollar, compared with about 26,920 on Thursday and about 26,200 on Wednesday, according to Persian-language currency tracking website Mazanex. Another financial site, Mesghal.ir, had the rial at about 27,650 to the dollar on Saturday.

There was no clear reason for the latest slide in the value of the rial, which is traded in an informal market of money changers, where ordinary Iranians go to access hard currencies.

Previous falls have coincided with new sanctions or diplomatic isolation of Iran over its contested nuclear programme, suspected by the U.S. and its allies of being aimed at obtaining a nuclear weapon. Iran denies this, but has faced successive rounds of stricter sanctions in the last two years.

Iranians rush to money changers to convert their savings into dollars, depressing the value of the rial.

The rial has seen a steep loss in value against the dollar in the last year. In June 2011, it was trading at about 12,000 to the dollar, or more than twice its value now, according to Mesghal.

Earlier this week the Iranian government established a new three-tiered currency system meant to restore stability to the rial but which does not appear to have allayed market concerns.

The system, along with a new “exchange centre,” allows importers of priority goods like meat and grains to buy dollars at the official “reference” rate of 12,260 rials to the dollar.

Importers of other basic goods are allowed to buy dollars at a “non-reference” rate 2 percent less than the open market value of the rial on any given day. On Thursday, that rate was 23,927 rials to the dollar,Iran’s central bank said.

The central bank said in a statement on its website that $34 million had been traded in the exchange centre in its first week.

The central bank’s deputy for foreign exchange affairs, Minoo Kiani-Rad, said the exchange centre would in time help stabilise the rial, according to a statement on the central bank’s website on Saturday.

“We must allow some time for the activity of this foreign exchange centre to continue so that real demands can be answered and the pressures on the open market can be diminished,” Kiani-Rad said. “In this case, there is no reason for a rise in the exchange rate.”