Prisoner exchange curbs inflation
According to Iran Gate, economists believe that the release of Iran’s blocked funds in South Korea will not only fail to curb inflation, but also lead to a surge in exchange rates and a continued upward trend in inflation rates. Many believe that although this release will initially reduce demand in the foreign exchange market, after a short period of time, the central bank’s dam against demand will break, leading to a sudden explosion in exchange rates.
The imminent release of Iran’s blocked resources in South Korea raises the question of whether this event can provide the grounds for curbing inflation. Will the dollar rate decrease in the Tehran foreign exchange market? How will the prices of essential goods be affected? Will there be a decrease in food inflation or any change in the current situation? This report attempts to answer these questions, although experts generally believe that the answer to all of these questions is negative, Iran Gate has included all their explanations for consideration.
Whose hand holds the money
Although the release of blocked Iranian resources in South Korea has not been determined yet, it is highly likely that the equivalent amount in dollars will be available to Qataris. As a result, Iran can import essential goods, including food and medicine, through Qataris. Therefore, contrary to the government’s claims, no money will be received by the Islamic Republic, and there will be no real commotion. However, can this monetary transformation improve the livelihood of the people?
What is a ‘kettan’?
In short, ‘kettan’ is inflation. In fact, all the talk revolves around inflation, and the rest are just annoying and misleading details. Government media and Ibrahim Raisi’s supporters have been constantly reporting on the imminent reduction of inflation due to the release of Iran’s resources in recent days. But this claim is not true at all. In other words, if this money does not have a positive impact on inflation, it is almost impossible to see its negative effect on inflation reports.
What will happen to the price of the dollar?
The price of the dollar will definitely be reduced or remain stable in the short term due to a decrease in demand for currency for imports. The market has also shown that it has not accepted the significant impact of these changes. However, it can potentially lead to a decrease or stabilization of the exchange rate. The central bank may also artificially intervene and increase currency injection to further reduce the exchange rate as part of the government’s promotional strategy. But in the best case scenario, this decrease and stabilization cannot last more than 3 to 5 weeks.
The reason for the increase in the price of the dollar in the market is the devaluation of the Iranian rial. In other words, the notion that the price of the dollar is increasing or not is incorrect. The correct statement is that the rial is losing its value against the dollar. Now, in order to control the upward trend of the dollar rate, it is natural to take measures to control inflation. Otherwise, there will be no sustainable effect on the increasing trend of the dollar rate. This is because the rial, which is caught in the fire of inflation, cannot be controlled without extinguishing the flames.
Controlling inflation is a major dream.
As mentioned, the release of blocked funds in South Korea will not have a negative impact on the upward trend of inflation rates. On the other hand, recent events under the leadership of the government have occurred, which may result in even more inflationary effects on Iran’s economy, even if these resources are released.
But what is the story? Perhaps at first glance, any release of resources would lead to a reduction in inflation. But the truth is that the government of Ibrahim Raisi has repeatedly misused the blocked funds in South Korea and has taken its equivalent value in rials from the central bank. In other words, the government falsely announced the release of blocked resources in Korea multiple times and forced the central bank to print money. It promised the central bank to provide the released dollars, and with these promises, it convinced the central bank to print money.
However, as we know, this money has not been released yet, despite the extensive advertising maneuvers by Raisi’s government. Nevertheless, the government has spent it in advance to cover its current expenses. This destructive action by the government has caused the share of money in liquidity to increase significantly and surpass the 25% threshold, which has been unprecedented in the past eleven years.
In fact, the bottom line here is that the government has deceived the central bank in a way that even if the blocked funds are released in cash to the central bank, we should expect an increase in inflation rates in the coming weeks. Economists believe that inflation, which is already expected to exceed 70% this year, will break new records and will be accompanied by a sharp increase in the prices of essential goods.
We are unaware of the agreement between Iran and the United States.
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