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News:
- Iran is reeling under the impact of reimposed sanctions after U.S. walked out of the nuclear deal.
Important facts:
2. Iran’s currency rial has lost over 50% of its value this year, pushing up prices and compelling consumers to convert their savings into gold and other assets.
3. Any additional squeeze could worsen domestic tensions.
4. Iran’s President Hassan Rouhani in July dropped central bank governor, for incompetence in handling the fallout from the currency crisis.
5. Tehran managed to double its oil exports, climb out of a deep recession and contain inflation.
6. With return of economic sanctions, Iran has been prohibited from using the U.S. currency, and faces a bar on trade in cars, metals and minerals.
7. New central bank chief has announced a relaxation of foreign exchange rules, creating access to subsidized hard money for purchase of essential commodities.
8. He also declared the reopening of currency markets.
9. Concern areas:
- There remains the risk of an Iranian blockade on the Strait of Hormuz, the passage for about a third of global seaborne oil shipments. It would disrupt supplies and cause panic in global markets.
- With much to lose from Iran’s international isolation, the European Union should exert diplomatic pressure to renew talks. A fresh nuclear agreement appears to be a remote possibility at this stage.
10. Way ahead:
- The global community must work together to ease U.S. Iran tensions.
- With much to lose from Iran’s international isolation, the European Union should exert diplomatic pressure to renew talks
