Iranian riyal hits record low as US sanctions batter currency


Washington Post
January 2, 2012

TEHRAN, Iran — Iran’s currency hit a new record low to the U.S. dollar on Monday, two days after President Barack Obama signed into law a bill targeting Iran’s central bank as part of the West’s efforts to pressure Tehran over its nuclear program.

State radio said the Iranian currency’s exchange rate hovered around 16,800 riyals to the dollar, marking a roughly 10 percent slide compared to Thursday’s rate of 15,200 riyals to the dollar. The riyal was trading at around 10,500 riyals to the U.S. dollar in late December 2010.

The bill signed by Obama on Saturday includes an amendment barring foreign financial institutions that do business with Iran’s central bank from opening or maintaining correspondent operations in the United States. The Obama administration, however, is looking to soften the impact of the measure, fearing they could lead to a spike in global crude oil prices or pressure key allies that import Iranian oil.

Iranian official warned last week that the Islamic Republic could easily close the Strait of Hormuz, through which a sixth of the world’s oil passes, if the new measures are applied. But analysts and diplomats have downplayed the warning as little more than bluster on the part of Tehran.

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