Recent Statements by Iranian Officials Regarding the Causes of the Currency Crisis; New Guidelines Issued

While officials of the Islamic Republic have pointed to various factors such as 'foreign countries', 'Telegram', and 'recent parliamentary decisions' to explain the recent currency crisis in Iran, Hassan Rouhani has mandated all agencies to implement new currency guidelines. According to IRNA, Hassan Rouhani, the President of Iran, in a meeting of the 'Government Economic Headquarters' held on Thursday morning, April 23, ordered all agencies 'with the central bank as the focal point' to strictly implement the new guidelines related to 'currency consumption'. Just a day earlier, the Cabinet approved a directive for 'organizing and managing the currency market', declaring currency exchange operations and transactions outside the regulations issued by the central bank as 'smuggling' and considering carrying more than 10,000 euros or its equivalent as a 'crime'. In recent days, Tehran police reported the arrest of 12 individuals whom they labeled as 'market disruptors', and one of the religious authorities residing in Qom called for the execution of 'a few key currency brokers'. Fereydoun Khavand, an economic analyst residing in Paris, told Radio Farda that influencing the currency market with a command and directive, or through police and emergency measures, is 'very, very difficult, if not impossible'. This economist also cited the Islamic Republic's tense foreign policy, the jeopardy of the JCPOA, and the possibility of the US withdrawing from this agreement as significant factors affecting the turmoil in the currency market in Iran. Following a surge in the prices of foreign currencies in the free market of Iran, where the price of each US dollar reached a new record of over 6,000 tomans, the government of Hassan Rouhani announced on Monday evening that from now on, the dollar would be offered at a single rate of 4,200 tomans. However, despite the government's promise, Iranian currency dealers say that the currency market is not very active and that no dollars have been distributed by the government at this price. A member of the Hope faction in Parliament stated that 'the recent tax legislation in Parliament' plays a role in transferring currency abroad. Jalal Mirzaei, a member of the Hope faction of the Islamic Consultative Assembly, said on Wednesday, April 22, in an interview with the 'House of the Nation' news agency, emphasizing that 'a large part of the currency market is affected by economic issues', stated: 'In discussions with economic actors and business activists, they believed that the parliamentary decision regarding the budget, which involves collecting taxes from individuals through financial transaction reviews, has caused some individuals engaged in exports and imports, who also have high reserves, to refrain from bringing part of their capital from abroad to Iran and to convert part of their domestic reserves into dollars and take them out of the country.' This parliament member also mentioned that 'this issue has been one of the main factors for the increase in demand for dollars and euros, and my suggestion is to suspend the parliamentary decision in this regard for two years, considering its impact, as some say 20 to 30 billion dollars have left the country.' Mirzaei also identified the decision related to importing goods through currency transfer as another factor in the recent fluctuations. The First Vice President of Iran, like several other officials of the Islamic Republic, has emphasized the role of 'non-economic' factors in the recent crisis. According to IRNA, Eshaq Jahangiri, the First Vice President, on Thursday, April 23, at the fourth session of the fifth term of the Supreme Council of Provinces regarding the recent currency crisis stated: 'Not all roots of currency issues in the country are economic.' Jahangiri accused 'foreign countries' of trying to make people worried about their future and creating a sense that they should buy currency and keep it at home or use their currency to buy properties abroad to alleviate their anxieties, thereby spreading a sense of hopelessness among the people. Ahmad Alavi, an economist residing in Sweden, in an interview with Radio Farda, deemed the increase in currency rates in the Iranian market as 'predictable' and stated: since, contrary to the promises of the central bank, no changes have occurred in the structure of the Iranian economy, the same previous and fundamental factors such as inflation, the rush of people to the currency market, and capital flight from the country have caused a continuous increase in currency prices.