Friday, 11 November 2011

Iran currency market feels impact of sanctions - FT.com

For many Iranians, the most tangible impact of international sanctions is on their country’s currency market, which struggles with a multiple-rate system and is jittery at the possibility of US restrictions on the central bank.

For more than a decade Iran’s central bank supported the national currency through a managed float system that helped it maintain a single rate against hard currencies.

The system enabled the central bank to pump foreign currency into the market and bring down rates as soon as the rial showed signs of weakening, or to withhold the hard currency supply to earn more rial-denominated income when the government faced a budget deficit.

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