A sum of just $300 appears in Iran as a string of several meters long bundles of banknotes, a sight that dramatically illustrates the devaluation of the Iranian currency.
Images of large amounts of cash lying on a store counter are attracting attention, as the Iranian rial faces one of the worst periods of weakness in its history.
In the free market, the US dollar crossed the 2.1 million rial mark on September 2, marking another negative record for the Iranian currency. According to Euronews , the rial has lost about 60 percent of its value against the dollar since the start of the Iranian year in March.
This means that $300, at the free market rate, could represent about 630 million rials. Due to the large denominations of banknotes and the constant devaluation, payments in physical cash require large quantities of banknotes.
In February, the Central Bank of Iran began distributing a 5 million rial note, which at the time was worth only about $3.10 at market rates. The introduction of increasingly larger denominations is a direct consequence of the currency’s declining purchasing power.
The crisis has been exacerbated by US sanctions, falling oil exports, military tensions and difficulties in securing foreign exchange. Reuters reported on September 3 that Iranian oil exports have fallen to about 260,000 barrels per day, from about 1.7 million a year ago, while inflation has risen sharply.
The governor of Iran’s Central Bank, Abdolnaser Hemmati, has said that the institution is ready to inject up to $2 billion into the foreign exchange market to stem the rial’s decline. However, pressure on the economy and prices remains high.
For Iranian citizens, the devaluation of the rial means an increase in the cost of imported goods, food, medicine and raw materials. The sight of $300 transformed into hundreds of millions of rials has become a powerful illustration of the currency crisis and the decline in purchasing power in the country. /Telegraph/