Iran fixes currency rate to stop rial collapse

TEHRAN, Apr 10 (AFP): Iran took the drastic step of fixing the rate of its currency against the dollar on Tuesday in a bid to arrest a slide that has seen it fall by a third in six months.
The rial has reached a series of record-lows in recent weeks, and stood at
58,650 to the dollar at the close of business on Monday, driven mostly by speculation that the United States would pull out of the nuclear deal with Iran next month.
After an emergency session of the government on Monday night, Vice-President Eshagh Jahangiri said the rate would be capped at 42,000 rials to the dollar and foreign exchange offices would be brought under the control of the central bank.
"Unfortunately in recent days, incidents have happened in the rate of foreign currency which have caused concern for the people," he said in comments on the state broadcaster.
He blamed "non-economic, unjustified and unpredictable factors" for driving the rial's collapse, given that its exports were performing strongly.
"There should not be such incidents in an economy that always has a surplus of foreign currency. Some say interference by foreign hands is disrupting the economic climate and some say domestic machinations are spurring these things in order to destabilise the climate in the country," added Jahangiri.
US President Donald Trump has threatened to walk away from the nuclear deal and reimpose sanctions on Iran next month unless new restrictions are placed on its missile and atomic programmes.
Analysts say that has encouraged Iranians to horde dollars in the hope of selling them for a profit when the currency collapses further.
Jahangiri said currency sold beyond the set rate would be considered "contraband".
"Just like the smuggling of drugs, no one has the right to buy or sell it... If any other exchange rate is formed in the market, the judiciary and security forces will deal with it," he warned.
The rial stood at around 40,000 to the dollar in October, when Trump said he would no longer certify Iran's compliance with the nuclear deal, and has been falling steadily since.
No exchange rate was fixed for the euro or sterling which have also seen massive gains against the rial in recent months.
Meanwhile, the United States on Tuesday welcomed a push by some EU states to impose new sanctions on Iran and warned firms considering doing business with the Islamic Republic that they could be funding militant groups and regional instability.
U.S. President Donald Trump has set European allies a May 12 deadline to revamp an international deal agreed with Tehran in 2015 that lifted international sanctions against Iran in exchange for curbs on its nuclear programme.
Speaking in London at the start of a tour of European signatories to that deal, Sigal Mandelker, Under Secretary of the Treasury for Terrorism and Financial Intelligence, said sanctions were an important part of a comprehensive effort to counter Iran's "malign activity" in the region.
"We understand that the EU, it's been reported in the press, is considering new Iran-related sanctions. This is a good and important step that we support," she told reporters before meetings with British officials.
Last month, France, Britain and Germany sought EU support for approval of new sanctions, but have struggled to persuade other member states to back them. Mandelker will visit Berlin and Paris during her three-day tour.
Mandelker said Iran was using money to support Hezbollah, Hamas and Syrian President Bashar al-Assad and that those attempting to do business with Iran despite the sanctions risked indirectly funding those groups' activities in the Middle East.
"We say any company thinking about doing business in Iran or with Iranian companies face serious risks that they will be doing business with those, like the IRGC (Islamic Revolutionary Guards Corps), supporting terrorism and instability throughout the world," she said.
Iran's President Hassan Rouhani warned on Monday that the United States would regret pulling out of the nuclear deal, and that Tehran's response would be stronger than anticipated.
The 2015 pact between Iran and six major powers - Britain, China, France, Germany, Russia and the United States - lifted sanctions that had crippled Iran's oil-based economy, in return for restrictions on its nuclear activities.
But, since coming to office, Trump has criticised the deal, agreed under his predecessor Barack Obama, and told European allies to "fix the terrible flaws" of the deal, or he will refuse to extend a suspension of U.S. sanctions on Iran.
Mandelker said Iran had not complied with the terms of the deal, citing factors such as a continued lack of transparency in the Iranian banking system.