Iran removes subsidized official rate for US dollar

Iran removed on Saturday a subsidized, lower official rate for the U.S. dollar in the country 's financial and business system, semi-official Mehr news agency reported. The cheaper official rate for the U.S. dollar stood at 12,260 rials since January 2012, which was supposedly allocated to the imports of basic commodities and medicine. Iran's Central Bank announced Saturday that, to homogenize rial 's value against foreign currency, it has decided to replace the cheaper rate by the new "reference" rate of one dollar for 24,779 rials, according to Mehr. The new subsidized rate is two times weaker than the previous official rate. Meanwhile, in the black market, the rial now hovers at around a third of the value it was at the end of 2011. On Saturday, one U.S. dollar was traded for 33,400 rials in Tehran's street market. The depreciation of rial's value came after the United States and the European Union levied sanctions on Iran's energy exports and financial sector which has almost cut off the Islamic republic from the global banking system. The United States and its Western allies suspect that the nuclear program of Iran might be directed at weapon grade activities, the charges Iran strongly denies, emphasizing on its civilian nature. In the past months, some local political and economic observers said that the lower dollar, which was supposed to be allocated by the Iranian government to the imports of only the needed goods, was misused for the imports of some luxurious products including expensive cars and cosmetics.