Behind the Headlines/October 9

In tonight’s program of Behind the Headlines:

What is behind the rapid fluctuations in Iran’s foreign exchange markets?

Is the Rouhani government behind the hoarding of foreign currencies?

What is the relationship between the truck drivers’ strike and the closure of bazaar in protest against the regime’s economic decision?

Our guests tonight to discuss these topics are Reza Taghizadeh and Shervan Fashandi.

Reza Taghizadeh:

The economic and political situations in Iran are quite critical and the government is going through a deep and serious crisis. It is not a unique situation as all dictatorial regimes have experienced it before and this time it is happening in Iran.

At the time of economic and political crisis authoritarian regimes become more repressive instead of looking for solutions as they think that if they do not crack down on their populations they will explode and remove them from power.

The current crisis in Iran is the accumulation of decades of corruption and mismanagement. The free fall of Iranian rial is a good indication of this issue as government after government have just printed more notes to supposedly stabilize the national currency but it has led to more inflation and instability in the economic system.

The problem with the Iranian situation is that the regime is taking every wrong decision only to remain in power.

Shervan Fashandi:

The current fluctuations in the value of US dollar against Iranian rial are also related to the law of demand and supply in the market.

In Iran the government is the biggest hoarder of foreign currencies, namely the US dollar. At the same time something in the region of $30 billion is in the possession of the public. These two players are constantly fighting one another to add value to their possessed capital, which is in US dollar, and this leads to the rapid fluctuation that we see in Iran’s foreign exchange markets.

Then we have the middlemen in the market who make the situation even more unpredictable and naturally less stable as they seek their own share of profit too.

Reza Taghizadeh:

We have had no specific economic system under the current regime in Iran and it has mainly acted as a powerful middleman that has always sought its own economic benefits at the cost of free enterprises and the public.