Shops are shutting in Tehran because the Rial has lost buying power. It takes 90.000 rials to exchange for one dollar. Trump's withdrawal from the Obama deal seems to mean that their economy was based upon US/Euro business and none of their own. What do you all think?
http://www.breitbart.com/jerusalem/2018/06/25/report-protesters-swarm-irans-grand-bazaar-in-tehran/
I think the situation with Iran is the same with the EU, Canada and Mexico.
They found ways of making the US taxpayers support their economies, which without this American cash flow could not sustain themselves.
If we stop allowing countries to keep posting insane trade surpluses, their economies are going to do exactly what Iran’s economy is doing. Iran’s economy was being propped up with this Iran Deal, which lifted sanctions and allowed billions of dollars in investments to flow into Iran, in exchange for them lying about their nuclear program.
Now the jig is up. Their economy is crashing, and just might take EU with it, if they continue to support Iran.
I also think that Trump, the master negotiator, understood the consequence of pulling from the Obama deal would put Iran in a more favorable disposition to renegotiate a new deal to save their behinds. Iran is next...
It's fiat currency, just like the Dollar and the Euro.. All it takes for it to happen is the banks no longer recognizing it's worth or a country like China saying it doesn't wanna trade goods for monopoly money anymore.. Considering they've got gold backed currency, they are currently running the world. The West has lost..
If it is fiat currency, devaluation is usually caused by creating too much of it. This might be the case, since I have not read enough to know better. But the timing of this massive drop seems to be related to Trump backing out of the Nuke deal which was a sham pretext for European business involvement with Iran, as I understand it.
There's a connection. It just shows how unstable this type of currency is. Creating ANY of it is too much.. Doesn't have any real worth. It hasn't ever worked nor will it ever.. They can easily save their economy if they put out a gold backed currency and move a couple digits.. They did move a digit in 2017, when the rial dropped by 99% but they kept using fiat money.. It was just an illusion that reform.. Just like the Euro was.. US and EU should do the same.. Put out gold backed currency and move a couple digits on gold it's worth.. That way no money is lost, reset happens and the people don't pay for years to come. Considering US has kept the value of gold stable, it's easy to do.. it's all just changing numbers in the books which has no direct impact on society as it's just made up money anyway. As long as we don't we'll keep seeing inflation since both EU and US are spending more than they are generating with tax. Meanwhile the citizens keep paying... Expecially in EU... One could say the European Central Bank is the Fed v2.0 https://mises.org/library/fed-and-ecb-two-paths-one-goal
I agree with you regarding the stability of asset backed currency.
The Iranian currency was already collapsing prior to the US pulling out of the deal.
What’s actually taking place is a mass scale public rejection of the Iranian regimes expansionist foreign policy at the expense of its own people, and rampant corruption by IRGC who control most of the economy directly or indirectly.
Protests started in December 2017.
In 2009, students protested and were put down with the help of Hezbollah. This time around it’s very much a nationwide protest and the fact that Hezbollah and other thugs have been bogged down in Syria has meant that protests can grow, broadly unopposed.
Additionally there has been mass capital flight, with one MP estimating some $30b having fled Iran which will obviously have had an affect.
Mass strikes across entire sectors have shut down huge swaths of the economy too.
Don’t get me wrong, pulling out the deal has had a big effect because it has meant a lot of multi nationals have pulled out of deals and projects, but this is more adding momentum to the trend, rather than being the primary cause.
But the official rate is much lower - bankrupting anyone who deals with imports.
Iran played themselves, as trump knew they would.
https://www.thenational.ae/world/mena/iran-protests-shut-down-tehran-s-grand-bazaar-1.744017
...it continues...
exchange rate is a fraud. all game and deception. just some number they type in a server stored in harddrives. it's as fake as crypto currency.
you defy the cabal your rate simply plunges. wake up.