Monday, September 10, 2012

Iran's Rial Drops 7%

By Micah Halpern
I've Been Thinking:

The rial, the currency of Iran, fell 7% in a single day. It happened yesterday and then picked up a little toward the end of the day. The damage to the currency was still dramatic.

Over several days in January the rial took a similar hit. This current drop in value can be blamed on the potential for further anti nuclear sanctions against Iran by the United States and the West.

Some background: I am referring to the street rate of the rial against the dollar, not the official rate. The street rate is a more true representation of the value of currency. The official rate, which is double that value, shows not the real worth of the currency, but rather, what the official government thinks it to be worth.

That explains why the street rate was about 24,300 rials to a dollar and the official rate was 12,260 rials to a dollar.

The name "rial" comes from the Spanish "real" which was the Spanish currency that represented the "rey" of the ruler/king. After the Iranian revolution it took years to mint new currency. The Shah's face was on the bills for as long as a decade.

Today all the currency in Iran has the picture of the Ayatollah Khomeni, leader of the Islamic revolt.

Micah@MicahHalpern.com 

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