Rial passes 10,000 to U.S. dollar.
In fact, the national currency has lost an average of almost 50 rials against the dollar each day this past week, a record speedy decline. However, the rial is rising even more dramatically against the euro--so the latest shift in exchange rates appears to reflect more the plummeting euro than Iranian economic travails.
During the month of October, the dollar has risen in value by 342 rials while the euro has plummeted by 1,038 rials. The irony is that the Islamic Republic concluded a year ago that the dollar was dead and shifted its reserves to the euro shortly before the euro sickened and shrank, not a very good investment decision.
Just a few months ago, the Islamic Republic was snickering at Arab states that had stuck with the dollar, were holding billions in U.S. bonds, and had pegged their currencies to the dollar. Now Tehran has fallen silent on the dollar. But it still sticks to its rhetoric that the United States is in decline, pointing now to the current financial crisis as evidence while ignoring the dollar's value, which was the evidence last year of the decline and fall of America.
The Iran Times tracks the rial's slide in 100-rial increments to measure the speed of its fall. The rial passed the 9,400 mark last December. It took almost eight months to pass the 9,500 mark on August 12. But it passed the 9,600 mark just 14 days later on August 26 and the 9,700 mark another 14 days later on September 9. Then it passed the 9,800 mark only two days later on September 11.
The drop then halted and even reversed for a while. But the drop has now resumed with a vengeance as the rial passed the 9,900 mark last Tuesday and then dramatically busted passed both 10,000 and 10,100 on Monday when the Central Bank priced the dollar at 10,147 rials.
That totaled a decline of 1,017 rials against the dollar since July 3, the day the price of an OPEC barrel hit its alltime high. That is an average fall of 10.6 rials per business day.
The sudden and immense fall in the rial's value largely parallels the drop in the value of the euro versus the dollar. For the last few years, the euro had steadily gained against the dollar. Early this year, the euro surged against the dollar, eventually hitting a high of $1.61 and settling in a range of $1.55$1.60 from April to July. Since the start of August, however, the euro has plunged and hit $1.25 last week, back where it was two years ago in October 2006.
One year ago, the Islamic Republic proclaimed that the dollar was dead and the euro would replace it as the international currency. The government announced it was getting rid of its dollars and would do business primarily in the euro and yen. It boasted early this year that its was taking in hardly any dollars in payment for oil.
But that looks like a poor decision now. The euro was priced at 14,643 rials on July 22, its high water mark against the rial. On Monday of this week, the euro was down to 12,608 rials, a loss of 13.3 percent. In that same time period, the dollar has risen 11.1 percent against the rial.
The table below shows the decline of the rial against the dollar in the time since the Central Bank in 2002 abolished the system of mythical exchange rates and began setting a market rate each day. The last column shows how long it has taken the currency to fall in 100-rial increments. The latest six 100-rial drops are the swiftest recorded.
7924 Now Ruz 2002-- 8000 25 Feb 03 48 weeks 8100 16 Mar 03 3 weeks 8200 07 July 03 16 weeks 8300 19 Aug 03 6 weeks 8400 29 Feb 04 27 weeks 8500 27 Mar 04 4 weeks 8600 13 Jun 04 11 weeks 8700 28 Jul 04 6 weeks 8800 19 Dec 04 20 weeks 8900 27 Apr 05 19 weeks 9000 15 Aug 05 16 weeks 9100 14 Jan 06 22 weeks 9200 17 Sep 06 35 weeks 9300 13 Aug 07 47 weeks 9400 15 Dec 07 18 weeks 9500 12 Aug 08 34 weeks 9600 26 Aug 08 2 weeks 9700 09 Sep 08 2 weeks 9800 11 Sep 08 2 DAYS 9900 21 Oct 08 6 weeks 10000 27 Oct 08 6 DAYS 10100 27 Oct 08 0 DAYS
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