By Micah Halpern
I've Been Thinking:
Iran's monetary currency, the Riyal, has plummeted 12% since Sunday.
On Saturday President Obama signed new sanctions against Iranian banks. Many Western observers are saying that free fall is due to those sanctions. Of course, the Iranians disagree.
The value of the Iranian Riyal, like other world currencies, is evaluated based on purchase power. If that power weakens the value of the currency falls.
There are several factors that make up that value. One of the factors is psychological. If people feel that there is a strong economy and stable government, the currency value grows. But if the economy is weakened or if there are attacks against the country's infrastructure, the currency's value drops.
The US boycott affects not only Iranian banks, it also effects anyone doing business with Iranian banks.
Bottom line: the Riyal only fell 12% - I am certain that those advising the president were hoping for a 25% fall in value.
Micah@MicahHalpern.com
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