Iran raises interest rates to 21% to ease cash crisis

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And approved by the Iranian President Mahmoud Ahmadinejad to increase interest rates yesterday to ease the currency crisis has been exacerbated by the new Western sanctions. The Minister of Economy, said that Ahmadinejad ratified the approval of the Monetary and credit to raise interest rates on bank deposits to about 21%.

And led sanctions announced by the United States and the European Union over the previous month target Iran’s vital oil exports and its central bank to the growing concerns about the weakened economy and foreign exchange inflows. The currency has lost Iranian Rial already part of their value since the decision was made last April to reduce interest on deposits in banks to between 12.5 and 15.5%.

Which is less than the inflation rate which currently stands at about 20%, prompting many of the Iranians to withdraw their savings from banks to buy gold and foreign exchange which in turn led to the rise of prices.

Safe havens

But the rush towards the safe havens accelerated sharply after the announcement of new sanctions, which resulted in the loss of 50% of the riyal against the dollar on the open market in one month only. The recent decision to drop the policy of Ahmadinejad, who faces political test is in the parliamentary elections to be held on the second of March.

He objected to Ahmadinejad in the earlier efforts of Mahmoud Bahmani governor of Iran’s central bank to raise interest rates. The fall in the riyal a significant threat of rising inflation have already made with Iran to import-intensive consumer and intermediate goods whose prices have increased with the depreciation of the rial.

New bubble

The West hopes the economic pressure to force Iran to abandon its nuclear program, which the West fears that the program aims to produce nuclear weapons, while Iran says it is purely for peaceful purposes. Mohammad Reza Mir Taj Din representative of the Iranian president in parliament that the policy will blow up what he called a serious bubble prices of gold and the dollar.

According to local media that the prices of gold coins weighing 8.133 grams of the one reported to have fallen by eight million and 500 thousand riyals consuming most of the increase achieved in the previous week and reached 45 percent, when the price rose to ten million and SR 100. The news agency quoted Iranian Mir Taj Din said, “will be the effects of the new resolution is clear on the market very soon, bubbles will end foreign exchange and gold.”

Exchange Rates

Not affected by the dollar exchange rate is mentioned as the agency said that the dollar fell to 22500 by the news than 23,000 Real Real, where he still like me when the official reference price of the Central Bank, which has 11,293 riyals to the dollar. However, exchange companies, said it did not have to sell dollars, which reflects either a lack of cash or a reluctance to sell in such a volatile atmosphere.