Cartoon by Arash Shayesteh

Iranian Currency Plunges as Three-Tier Fuel Pricing Takes Effect

IranWire: The Iranian rial fell sharply over the weekend as the government implemented a new three-tier petrol pricing system, with the dollar approaching 1,290,000 rials.

The dollar rose 30,800 rials from the previous trading day to reach 1,280,950 rials by Sunday.

The surge began immediately when currency markets opened.

The currency’s decline within hours of the fuel price changes indicates that the government’s policy directly affected market expectations and exchange rates, contrary to official predictions.

Many government officials and domestic economists had emphasized that the three-tier petrol pricing plan would have minimal impact on inflationary expectations. The sharp currency movement suggests otherwise.

Beyond fuel prices, government economic decisions since late November have contributed to heightened volatility in the currency market.

These include changes allowing imports without proof of currency source, a lottery program for purchasing cars, and the approaching end of the Persian year.

Economic analysts had forecast severe currency fluctuations for the third week of December.