Tuesday, August 26, 2008

USD is Gaining on Rial

There has been an increase in USD versus Iranian Rial in Tehran currency exchange markets. However I am not sure if this increase is due to USD gaining against Euro, or it is partially due to inflationary conditions of Iran’s economy. The high inflation usually causes household to seek other ways to save in Iran. The list of investments and savings is topped by purchasing properties and houses, which usually results in an increased in housing prices. The next item is purchasing gold and hard currencies.

An increase in USD value in Iranian markets could be due to increase in popular demand to save in hard currencies such as USD and Euro. I also wonder if sanctions have something to do with it, by limiting the number of suppliers of USD to Iranian merchants and private sector. One simple increase in an economic index and so many questions!

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