such as this one back in August), it should come as no surprise to Sober Look readers that Iran's economic conditions are spiraling out of control. Iran's currency (discussed here) has collapsed. The official exchange rate has been kept fairly constant - currently at 12,365 rial to the dollar. The street value however hit a new low of 35,000 rial to the dollar - a whopping 65% discount to the official exchange rate (see chart).
Bloomberg: - The rial fell to a record low of 35,000 to the dollar on Oct. 1, an 18 percent drop, on the unofficial market. The currency has plummeted since November when it traded at 13,200 to the greenback.The currency weakness has accelerated an already unsustainably high inflation rate, sparking unrest that shut down most black market foreign exchange shops.
Bloomberg: - Most foreign currency shops and outlets in Tehran’s Grand Bazaar were shuttered today while hundreds of Iranian riot police patrolled in the downtown area a day after protests over the tumbling national currency.In a classic sign of hyperinflation, the hoarding of goods is now spreading through the economy.
Police units were visible around Ferdowsi and Manouchehri streets, near one of the main areas for currency traders in the capital, as well as roads surrounding the Grand Bazaar further south. The minority of exchange houses that did open failed to display prices or carry out transactions.
Bloomberg: - People “are nervous about tomorrow and next week because they don’t know how much more expensive things will be,” said Mostafa Daryani, 52, whose family owns a Tehran supermarket chain. “They only buy their daily needs and ignore most of the things that are not urgent for daily life. Instead of one bottle of milk, they buy two.”sales, he said.At this point even if the sanctions are lifted, any resolution to this economic crisis in Iran has become untenable.
Prices of home appliances have doubled in the past six months and some shopowners prefer to hoard goods rather than sell them in the hope that they can get higher prices in the future, said Yahya Ebrahimi, 48, who owns an electronics store in central Tehran. Merchants are increasingly using the dollar value of items as the basis for sales, he said.