Iranian conservatives see election gambit in govt's monetary policy
Iranian conservatives, influential in traditional economic and trade circles, are accusing President Mohammad Khatami's government of flooding the market with dollars to manipulate next year's presidential election.
The conservatives, who delivered their message on television both Friday and Saturday night, slammed Iran's central bank for injecting large quantities of petrodollars into the parallel foreign exchange market. Mohammad-Reza Bahonar, a leading conservative thinker, said the value of the rial had halved in the past three years since Khatami's election to the presidency.
The government wanted to make the dollar, Iran's benchmark for all financial transactions, cheaper in the run-up to the May presidential poll, in which Khatami is expected to run for a second term. The greenback has lately sunk below 8,000 rials, its lowest level in two years. The official rate remains fixed at 3,000.
Conservatives fear that the saturation of the market place with dollars is designed to make things tighter for their key supporters, merchants who export non-petroleum products. "This policy of selling money encourages inflation and will weaken the national currency," warned economist Ahmad-Reza Jalali.
Since Saturday, the dollar has traded at 7,950 rials, down by 60 on the rate of a week before. Some Iranian economists estimate that the central bank has lately sold off more than four billion dollars and is preparing to put another $3.3 billion on to the market by next March.
The dollar's slide below 8,000 has also been attributed to a recent statement by the Central Bank Governor, Mohsen Nourbakhsh, a Khatami supporter, who said that the proper exchange rate should be 7,900 rials. — (AFP, Tehran)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)