Iranian currency value steeply depreciates

Iranian currency's value steeply depreciated against foreign currencies recently. According to semi-official Mehr news agency, one U.S. dollar was traded for about 35,000 rials in Tehran's street market at Istanbul square on Monday. The new record in rial's slump represents a 17-percent decline compared with Sunday's rate as one dollar was exchanged for about 30,000 rials. On the day, one euro was traded for 45,000 rials, displaying a fall of some 16.8 percent in rial's value set against Sunday's market rate. Due to the instability and fluctuation of currency exchange market, most of the exchange centers in Tehran's Ferdowsi square stopped their business, said Mehr. Also, most of the exchange centers cleared their announcing electronic boards from displaying the daily rates of foreign currencies, said the report. Last week, Iran announced that it opened a forex center under the supervision of the central bank to stabilize the depreciating value of its currency. The center started with a base value of 24,040 rials as for one dollar -- the rate was set to be 2 percent below the street market deals. Dollar at the designated value was supposed to be only offered to the imports of the country's needed goods. According to the local currency tracking websites Mazanex.com, the base value of one dollar was announced to be 26,720 rials in the forex center of Tehran on Monday, however, the center seemingly failed to dominate the market trend. On Saturday, Iran's central bank governor Mahmoud Bahmani said the street market was "resisting" the rates designated by the forex center, but the open market will give in in the following days, according to semi-official Fars news agency. Bahmani reiterated Monday that Iranian rial, which has steeply declined against U.S. dollar over the past week, will gradually rise in value as more transactions are made at Iran's newly established foreign exchange center, Mehr said. The forex transaction center is working with a robust backbone of foreign currencies, Bahmani was quoted as saying. The government plans to use revenues from petrochemical sales and 14.5 percent of its oil revenues to provide dollars for the center, said Bahmani. Since 2012, Iran's currency value has significantly slumped against foreign currencies due to heavy pressure in January brought by the U.S. sanctions on Iran's central bank. Earlier in September, Iran's currency value depreciated further against foreign currencies in the street market of Tehran as one U. S. dollar was exchanged for about 26,000 rials, the lowest since the beginning of the new Iranian year which started on March 20, whereas a year ago the same amount was traded for 13,000 rials. As the value of rial erodes and the concerns over the acceleration of inflation in the Islamic republic grow, Iranians turn to dollars and gold savings to preserve their asset's value. On Monday, Iranian Prosecutor General Gholam-Hossein Mohseni- Ejei said that the purchase capacity of people has weakened, according to Fars. Mohseni-Ejei maintained that the judiciary will deal with the individuals or groups which mean to destabilize the market. The government and Iran's Majlis (parliament) are working on some mechanisms together to solve the economic issues, he said, adding that the judiciary system of the country hopes their joint work would be successful and bear positive results in the near future. According to analysts, Iranian rial's value suffers further depreciation due to the mismanagement of the country's economic and financial sector and as Western sanctions tighten against Iran 's financial, energy and petrochemical sectors over the Islamic republic's disputed nuclear program.