Ebrahim Raisi, the new president of the Iranian regime, has proposed to the parliament that the official dollar exchange rate of 42,000 rials be abolished. Many of the regime’s economic experts believe this is a risky measure that will raise inflation and consumer goods prices.

Iranians are dealing with inflation and surging prices

According to Majid-Reza Hariri, Chairman of the Iran-China Chamber of Commerce, this decision comes at a time when Iran’s economy is at its most “dangerous historical point” in the last four decades.

Iranians are dealing with rising inflation and surging prices. While there are many theories on what caused Iran’s economic problems, all evidence points to the regime’s pillage, corruption, and weak economic policies.

The government of Hassan Rouhani decided to “unify” the free market rate with the official rate. The official rate is 42,000 rials to one dollar. Only critical products were supposed to be imported at this official rate. However, as the official rate quickly became inefficient, the government immediately acknowledged alternate foreign currency rates.

 

  Mullahs are not able to price control

On November 7, 2021, Fars News Agency reported that “in 2019, around $15 billion [based on the official exchange rate] was spent on importing various items.” “Aside from all of this, Rouhani’s government was virtually incapable of price control.” According to surveys, the importers embezzled roughly 5.1 quadrillion rials in that year based on the free-market exchange rate.”

Rouhani exacerbated his government’s already large fiscal imbalance by handing out $15 billion in currency. Since then, Tehran has been producing banknotes to make up for its financial deficit. Inflation and prices are increasing as a result of the increased liquidity, which far exceeds Iran’s production rate. Many raw commodities utilized by automakers saw artificial demand and price spikes as a result of the liquidity surplus.

The fixing of the dollar exchange rate and the existence of several currency rates resulted in corruption throughout the economic cycle, from import to distribution and sales.

 

 

Tehran is determined to continue it,s nuclear program

The so-called “private sector,” or rather the Revolutionary Guards’ (IRGC) front businesses charged with importing critical consumer products, profited more from the official exchange rate. They either imported unneeded luxury goods or raised the final market price of the goods. To get around sanctions, the IRGC has always used the guise of the “private sector.”

During Rouhani’s final year in office, the regime planned to abolish the official exchange rate of 42000 rials per dollar. Rouhani’s administration estimates that by doing so, it will be able to generate at least 600 trillion rials. With the present exchange rate of 280,000 rials for $1, Raisi’s government would receive around $2 billion if the official exchange rate is suspended or removed.

However, abolishing the official exchange rate would not achieve much for Tehran, given the rapid depreciation of its national currency and its extensive to-do list, which includes supporting its terrorism network and maintaining its clandestine nuclear program. This measure would have a significant impact on Iran’s ailing economy and exacerbate the country’s unrest.

 

 

People with nothing to lose will soon take to the streets

“The Iranian economy is on a difficult path. On November 9, the state-run Resalat daily noted, “The budget deficit and the wrong solutions to resolve it will result in more inflation.” “In the meantime, leaders’ economic views are posing new problems. “Even if we inject currency into the market to keep the exchange rate low, it will not last long,” Resalat stated, adding, “We cannot manage the economy with temporary solutions and simply giving orders.”

The Iranian leadership is, without a doubt, in a terrible economic bind. It urgently needs funds to carry out its nefarious actions, such as financing terrorism and developing a nuclear weapon, which it regards as essential to maintaining its isolated rule.

Raisi’s only option is to put his hands deeper into people’s pockets. However, doing so would exacerbate societal unrest. People with nothing to lose will soon take to the streets, and the dictatorship understands that this will put an end to its 40-year reign of corruption and brutality.

 

 

 

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