Iran's national currency had dropped past 100,000 rials to the US dollar for the first time in late July as Iranians braced for August 7 when Washington was due to reimpose the first batch of economic sanctions.
The rial’s freefall continued in the coming months reaching the all time low of 190,000 rials to the greenback in early fall. But after November 4, the date of second round of illegal US sanctions, it seemed that much of the impact of the new restrictions had already baked in.
Promising news about Iran being able to export its oil to its main customers, along with other measures taken by the Central Bank of Iran, prompted a reversal in the forex market, Financial Tribune reported.
Next to Impossible
President Hassan Rouhani in a statement broadcast live on state TV on Tuesday said export of Iranian oil has improved since early November.
The United States imposed sanctions on Iran’s oil industry in early November and US officials have said they want to reduce “Iran’s oil exports to zero.”
Tehran has said that that would be next to impossible and if “Iran cannot export oil no other country (in the region) would be able to do so.”
Tensions have spiked between Iran and the US after beleaguered President Donald Trump pulled out of an international agreement on Iran’s nuclear program in May.
Rouhani says the US was also unsuccessful in preventing OPEC from cutting production. OPEC and its Russia-led allies agreed last week to cut oil production by more than the market had expected, despite mounting pressure from Trump not to reduce output.
“The Americans were unsuccessful in the OPEC meeting and Iran had some successes,” Rouhani said. “The process of selling our oil will continue in the same way as it did before this meeting.”
On Tuesday the rial also gained against other currencies; the euro was traded for 130,000 rials, down from the previous day's 131,000. Gold coin prices also posted declines.
EU Efforts Continue
The European Union's foreign policy chief said on Monday a system to facilitate non-dollar trade with Iran and circumvent US sanctions could be in place by the yearend.
The European Union wants the so-called Special Purpose Vehicle (SPV) to help preserve the economic benefits for Iran from the nuclear deal.
As part of its market control mechanisms, the Central Bank of Iran has started a new policy to limit bank transfers via POS devices. Each individual can only transact a specific amount per day by sending the national identification card numbers to the bank.
The policy was officially implemented on Saturday and aims to limit money transactions via the POS machines outside the country and monitor bank transactions.
According to experts, the CBI plan has to some extent prevented capital flow from the country and as a result buying property and foreign exchange in Turkey, Armenia and Canada via POS (Point-of-Sale) by some Iranian companies has come to a halt.
In September, a top government body, headed by Rouhani and the heads of parliament and the judiciary authorized the central bank to intervene in the foreign exchange market in defense of the rial.