ZW: Dollar falls in Iran as banks resume selling greenback
TEHRAN, Oct 05, 2010 (AFP) - The US dollar fell in Iran on Tuesday as local banks heavily sold the greenback in a bid to boost the Iranian rial, which has been pounded by the US currency in the past few days, dealers said.
The dollar was trading at around 10,750-10,800 rials compared to 12,500 rials seen last Wednesday when banks stopped selling the greenback to private individuals unless they could produce a passport and air ticket.
Long queues were seen on Tuesday outside several banks and official foreign exchange houses as dollars became freely available again.
Before the banks last week began restricting sales of the greenback without any explanation, the rial was trading at 10,500 to the dollar.
Economists had said the drying of the greenback was an indication that latest international sanctions against Iran for refusing to halt its controversial uranium enrichment work were beginning to bite.
They pointed in particular to the fact that Dubai, Tehran's main trading partner, had stopped money transfers there since August after similar decisions by the United States and the European Union.
On Tuesday, a dealer said this week's large sell-off of the dollar was in fact an attempt to counteract the effect of sanctions.
"We do not have access to the outside world as we have difficulty in transferring money outside because of sanctions. This (selling of US dollar) is the (government's) way of battling the sanctions," he said, asking not to be named.
Another dealer predicted the price of the greenback would continue to fall.
"With measures taken by the government, the rate of dollar will drop every day," said the dealer, who also declined to be named.
The recovery in the rial follows a statement last Thursday by central bank governor Mahmoud Bahmani that Iran intends to bring dollar rate down to 10,600 rials by around October 8.
Bahmani added that Iran has "increased its reserves" and would continue selling gold coins and foreign currency to professionals.
The central bank over the past few years has consistently ensured that the Iranian rial remains bullish against foreign currencies.
The UN Security Council imposed a fourth round of sanctions on June 9 over Iran's controversial programme of uranium enrichment, which many Western states believe may mask a covert bid to make a nuclear bomb, a charge Tehran denies.
The United States and European Union have since unilaterally imposed even tougher punitive measures, adding provisions that penalise Tehran's trading partners.
