What was the reason for the decrease in the dollar price?
Market manipulation with Farzin’s command
What was the reason for the decrease in the dollar price? According to Iran Gate, the dollar price has relatively decreased since the beginning of this week and returned to the 30,000 toman range. However, this return did not last long, and once again, the dollar price returned to the 40,000 toman range by the end of Sunday, January 1, 2023. Yet, economic activists constantly face this question: what is the reason for this strange and sudden decrease in the dollar rate?
It was last Thursday that the Central Bank announced the surprising resignation of Ali Saleh Abadi, and immediately the news of Mohammad Reza Farzin replacing him was released. From the very first moments of this managerial change in the Central Bank building, the currency market faced a decrease in the dollar price. The dollar rate, which had advanced to the 44,000 toman range, returned to the 41,000 toman range before the start of the current week.
On Saturday and Sunday, the currency market continued the downward trend of the dollar price to the point where, for a few hours, the dollar rate retreated to the 38,000 toman range. However, this decrease did not last, and once again, prices entered an upward phase and reclaimed the 40,000 toman range.
What is the reason for the drop?
As previously mentioned, the downward trend in the dollar price began simultaneously with the announcement of Farzin’s appointment as the head of the Central Bank. The first stance of the new Central Bank president also revolved around the repetitive discussion of stabilizing the exchange rate in the NIMA market. It was these remarks by Farzin on the Islamic Republic’s broadcast that gradually led the currency market to consider a retreat, albeit temporary.
Alongside these positions, some analysts and economists also spoke about Farzin’s rise to power with the aim of creating stability in the currency market. However, some experts believe that the Ebrahim Raisi government appointed Farzin due to public opinion and media pressures and to control the dollar price in the free market. Hence, it is said that the Central Bank tried to carry out extensive currency injection into the market simultaneously with the announcement of Farzin’s presidency. Although the psychological atmosphere created following this appointment also played a role in the declining trend of the dollar price, currency market activists report evidence of currency injection around Ferdowsi Square and Istanbul Crossroad.
Currency Signal from the Budget to the Market
Another reason that caused the exchange rate to enter a downward phase, albeit short-term, was the signal issued by the publication of budget details concerning the government dollar price for 2023. Setting the government dollar rate at 23,000 tomans for next year’s imports, according to experts, was only aimed at sending a message to the free market.
Of course, how effective such a message can be is another discussion altogether. However, some experts believe that the government’s main goal in setting the exchange rate is only to influence the fluctuations in the exchange rate. Looking at the dollar’s price changes this year, it can be said that not only will this tactic not achieve the government’s goals, but it will also only deepen the environment conducive to increased corruption.