Economic Warfare: Iran Signals Currency Devaluation
August 7, 2012
Economic warfare against Iran is beginning to have an effect. On Monday, Iran’s rial dropped around 5 percent against the dollar as Iran’s central bank announced further currency devaluation that will begin in ten days. In January, the country announced an 8 percent devaluation of the rial to 12,260 against the dollar. The rial has weathered a dramatic devaluation since the beginning of the year.
The move is another sign that sanctions imposed on Iran allegedly in response to its nuclear program are beginning to take a toll. Iran is cut off from the international banking system and the rial has lost around half its value against the dollar on the so-called free market.
The IMF admits the sanctions are designed to break the country and force it to run up an external deficit. The bankster loan sharking operation predicts Iran’s crude oil exports will dwindle to 2.0 million barrels per day this year from 2.5 million last year. Pressure applied by the sanctions will result in a current account surplus drop from 10.7 percent of gross domestic product to 6.6 percent.
Currency devaluation will undoubtedly feed inflation. Prices on consumer goods have risen at annual rates above 20 percent.
In July, the head of Iran’s Presidential Center for International Legal Affairs, Majid Jafarzadeh, said the government of Iran will take legal action against the United States and the European Union for imposing sanctions outside of the framework of the United Nations Security Council.
“The sanctions in the area of health and similar fields are a violation of human rights, and can be legally pursued,” Seyyed Hossein Naqavi Hosseini told Press TV.
The collapse of Iran’s currency and government commodity subsidy cuts have resulted in steep price hikes. The price of gasoline has risen three-fold and the cost of gas has skyrocketed by 500 percent.