Iran rial sinks to record low after fresh EU sanctions

TEHRAN (AFP): Iran’s currency plunged to new lows Monday amid fresh European Union sanctions, crossing the psychologically important rate of 500,000 rials to a dollar in foreign exchange markets.

To counter the slump, central bank chief Mohammad Reza Farzin proposed opening a new foreign exchange centre.

“We will supply the currency needed for basic goods from the sale of … oil and gas condensate,” state television quoted him as saying, referring to a light type oil produced during natural gas production.

Iran is suffering from a nearly 50 percent inflation rate and increasing commodity prices.

Last week, supreme leader Ayatollah Ali Khamenei acknowledged Iran is facing many shortcomings such as “high prices, inflation and the depreciation of the national currency.”

On Saturday, ultra-conservative President Ebrahim Raisi pledged to “control the price of foreign currencies”.

The EU measures imposed on Monday targeted 32 individuals and two entities, issued in response to months-long protests triggered by the death of Mahsa Amini, a 22-year-old Iranian Kurd who died after her arrest for an alleged breach of the country’s strict dress code.

Iran has also been the target of biting economic sanctions since 2018 by the United States, when then-president Donald Trump withdrew his country from the 2015 nuclear deal between Tehran and world powers.

The deal gave Iran sanctions relief in exchange for curbs on its nuclear programme to guarantee that Tehran could not develop a nuclear weapon — something it has always denied wanting to do.

On-off talks to revive the agreement began in April 2021 but have since stalled, with Iran hit with additional Western sanctions, including for the supply of drones to Russia to be used in the war in Ukraine, an allegation Tehran denies.