Saturday, 2 June 2012

The Latest from Iran (2 June): Holding the Currency Line

0515 GMT: A quiet weekend for Iranian politics so far --- IRNA goes through the motions to feature the former Malaysian Prime Minister criticising war and sanctions, while Press TV tries to take advantage of the US Government's revelation that it has pursued cyber-warfar against Tehran for years, with President Obama expanding the effort.

So we turn to the lead story in Fars: the announcement that Sunday is the last day that Iranians can get 24% bonds in exchange for gold coin --- from Monday, the rate will be 20%.

Not exactly an article to get the heart racing, but it is still a significant measure of the Central Bank's efforts to get control of the Iranian currency market. By reducing Iranians' demand to hold gold, the Bank is hoping to limit the price while propping up the Iranian Rial.

The Bank's months-long effort, including the bonds-for-gold initiative, has had limited success. The gold price has fallen since it spiked earlier this year, now standing at 668,000 Toman (about $430 at official rate) for old gold coin. However, the Iranian Rial, after bouncing back in the spring from its historic lows at the start of the year, is still shaky. The open-market rate is 17680:1 vs. the US dollar, compared to 15800:1 at one point last month.

from EA WorldView: EA Iran

Posted via email from lissping