Iran raises rates, closes accounts to shore up rial
Iran has raised bank deposit rates and frozen the accounts of hundreds of foreign exchange dealers in a bid to shore up the value of the rial, reports said on Feb 15.
The currency had lost a quarter of its value in six months, sliding to a record low of 48,400 to the dollar on Wednesday, as U.S. President Donald Trump’s threats to tear up a landmark 2015 nuclear deal dash hopes of a surge in foreign investment.
In a bid to stem the decline, the central bank announced that to encourage savers to keep their money in rials rather buying hard currency, it would ease the cap it imposed in September on the deposit rates offered by lenders, Iranian media reported.
Banks will now be able to offer interest rates of up to 20 percent on fixed one-year deposits against 15 percent previously.Authorities also closed the bank accounts of 775 people they suspected of distorting the foreign exchange market with capital movements totaling some 200 trillion rials (more than $4 billion), government daily Iran reported.
The move came after police closed 10 foreign exchanges on Wednesday and arrested around 100 dealers.
State television broadcast footage of the crackdown.“The foreign exchange speculators have been identified,” central bank chief Valiollah Seif said, quoted by Iranian media on Feb. 15.“We will use all means at our disposal to get out of this situation and restore calm to the market.”
The combination of measures had some success in shoring up the value of the rial -- it was changing hands at 47,400 to the dollar early on Feb. 15.
But it was still a far cry from the 10,000 level it was trading at prior to the tightening of US-led nuclear sanctions in 2012.The nuclear deal struck in 2015 had raised hopes that level would return and, when it was announced, many Tehranis celebrated by waving dollar bills alongside 10,000 rial notes.But those hopes have long since subsided and Iran was rocked by a wave of economic protests last month.