Iran's currency suffers new depreciation after U.S. sanctions Iranian central bank
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Xinhua, January 3, 2012
Two days after the U.S. sanctions on Iran's central bank was announced, Iran's currency, rial, presented a significant slump against the U.S. dollar.
On Monday, one dollar was exchanged for 17,800 rials in the street market in Tehran which showed almost 2,300 rials difference, slightly over 10 percent, in comparison with its rate on Saturday. On Saturday, one dollar was exchanged for 15,500 rials in Tehran's street market.
On Saturday, U.S. President Barack Obama signed a wide-ranging defense funding bill, calling for new sanctions against financial institutions doing business with Iran's state banking institutions.
The bill, approved by Congress last week, aimed at reducing Tehran's oil revenues but gives the U.S. president powers to waive penalties as required.
According to an amendment contained in the sweeping bill, foreign financial institutions doing business with Iran's central bank are banned from opening or maintaining correspondent operations in the United States.
The ban only applies to foreign central banks for transactions that involve the sale or purchase of petroleum or petroleum products. The penalties do not go into effect for six months, according to the bill.
U.S. officials said Washington was engaging with its foreign partners to ensure the sanctions can work without harming global energy markets.
Iranian rial has lost over 60 percent of its value against dollar in comparison to its trading value in December 2010, which stood at around 10,700 rials.
In the face of further western sanctions on Iran's oil exports over the country's controversial nuclear program, the economists say Iran's currency fears more slumps. They say U.S. dollars is more likely to be exchanged for even 20,000 rials by the end of current Iranian calendar year, on March 19, 2012.
Iranian officials has threatened to close the strategic Strait of Hormuz if their oil exports are sanctioned. The Islamic republic heavily relies for its annual revenue on crude exports and its by-products.
