What was the reason for the decrease in the dollar’s price?
Market manipulation by Farzin’s command
What was the reason for the decrease in the dollar’s price? According to Iran Gate, the dollar’s 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’s price returned to the 40,000 toman range in the late hours of Sunday, December 31, 2022. Yet, economic activists are constantly faced with the question of what caused this strange and sudden drop in the dollar’s rate.
Last Thursday, the Central Bank announced the surprising resignation of Ali Salehabadi, and immediately, the news of Mohammadreza Farzin replacing him was released. From the very first moments of this management change in the Central Bank building, the currency market faced a decrease in the dollar’s 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.
The currency market continued the downward trend of the dollar’s price on Saturday and Sunday to the extent that for a few hours, the dollar rate retreated to the 38,000 toman range. However, this decrease did not last, and once again, the 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 of the dollar’s price began simultaneously with the news of Farzin’s appointment as the head of the Central Bank. The first stance of the new Central Bank governor also revolved around the repetitive discussion of stabilizing the exchange rate in the Nima market. It was these statements by Farzin on the Islamic Republic’s television that gradually led the currency market to consider a retreat, albeit temporary.
Simultaneously with 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 Raisi government appointed Farzin due to public and media pressure and to control the dollar’s price in the free market. It is said that the Central Bank tried to conduct extensive currency intervention in the market alongside the announcement of Farzin’s appointment. Although the psychological atmosphere created following this appointment was not without impact on the downward trend of the dollar’s price, currency market activists report evidence of currency intervention around Ferdowsi Square and Istanbul Crossroads.
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 sent by the release of budget details regarding the government dollar price for 2023. Setting the government dollar rate at 23,000 tomans for next year’s imports is seen by experts as solely a message intended for the free market.
Of course, how effective such a message can be is another discussion, but some experts believe that the government’s main goal in setting the exchange rate is only to influence the fluctuations in the exchange rate. However, looking at the price changes of the dollar this year, it can be said that not only will this tactic not achieve the government’s goals, but it will only deepen the fertile ground for increased corruption.
