In November 2008, when crude oil price dropped at international markets and US dollar rate advanced, a dollar was exchanged for 10180 rials. But then Central Bank of Iran (CBI) injected dollar to the market for curbing its price which later retreated to less than 10,000 rials. However at that time the downward trend of the US economy indexes and the plunge of dollar rate against other major currencies of the world also helped CBI to control dollar price in the local market.
This year such an up and down process is underway not due to the fluctuations of dollar rate at international markets, but for a growing demand in the local market.
Dollar rate boosted last week when it was reported that CBI is to execute the regulations set for money laundering, therefore on Monday a dollar exchanged for 10250 rials and on Tuesday for 10200 rials. The trend seems to be continued as the demand in the local market is getting higher.
The 2.5 percent rise of dollar rate in Iranian market has not been influenced by international markets where dollar price has not increased, it even has dropped against some other currencies. As a matter of fact analysts believe that the growth in local demand is originated from a number of concerns.
First, worries are expressed over the prospect of Iranian economy at the end of the current Iranian calendar year (ends on March 20, 2010). Also a new wave of inflation awaits local economy from the beginning of the next year, when the implementation of subsidy reform bill would lower rial price.
Second, concerns over reports issued on the situation of governmental banks which have gained the attention of Iranian people more than the official statements made by CBI.
Third, the news on the execution of money laundering rules has enhanced rumors spread among the local businessmen on the bankruptcy of Iran's banking system.
The intensity of recession which hit Iranian economy this year has led the businessmen to save the value of their liquidity by convert it to US dollar and/or Bahar-e Azadi golden coins.
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