U.S. Treasury Secretary Scott Bessent said, “If I were an Iranian, I would get all my money out of the rial now,” citing the Trump administration’s policies to cripple Iran’s economy
U.S. Treasury Secretary Scott Bessent said, “If I were an Iranian, I would get all my money out of the rial now,” citing the Trump administration’s policies to cripple Iran’s economy
U.S. Treasury Secretary Scott Bessent said, “If I were an Iranian, I would get all my money out of the rial now,” citing the Trump administration’s policies to cripple Iran’s economy.
Following Bessent’s comments and President Donald Trump’s threats to intensify sanctions, the dollar exchange rate in Iran rose by more than 20,000 rials.
The value of the rial continues to fall despite recent market interventions by Iran’s central bank and security measures, including the arrest of several currency exchangers, which had temporarily lowered rates.
Businesses in Iran are increasingly looking to preserve their capital as they observe signs of inflation for the coming Persian year, which starts later this month.
Their concerns have grown after Islamic Republic officials ruled out negotiations with the U.S.
Converting rial-based assets to foreign currencies is one of the primary methods Iranians use to protect their capital value.
The U.S. is deploying sanctions against Iran aggressively for “immediate maximum impact,” Bessent told the Economic Club of New York.
Trump’s goal is to slash Iran’s oil exports of 1.5 million barrels per day to a trickle, he said.
“We are going to shut down Iran’s oil sector and drone manufacturing capabilities,” Bessent said. The administration also intends to cut off Tehran’s access to the international financial system, he added.
Prices for U.S. crude oil and the global benchmark Brent turned positive after Bessent’s comments.
West Texas Intermediate rose 5 cents to close at $66.37 per barrel, while Brent gained 16 cents to settle at $69.46.
“Making Iran broke again will mark the beginning of our updated sanctions policy,” Bessent said. “If I were an Iranian, I would get all my money out of the rial now.”
Inside Iran, despite the security atmosphere in financial markets and military and security forces’ intervention, the dollar rate has reached 920,280 rials.
The rising demand for capital goods is driving up prices, as signs of inflation and currency devaluation in Iran this year are undeniable, even without U.S. threats being carried out.
The increase in the Producer Price Index (PPI), also known as “forward-looking inflation,” which transfers to consumer inflation or general inflation with a time lag of two to three months, is one of the signs of inflation increasing this year.
If U.S. threats materialize and Iran cannot sell oil, the budget deficit could cripple its economy.
Buying and Storing Foreign Currency in Iran
Physical storage of banknotes: According to the Central Bank of the Islamic Republic, the cap for physically holding foreign currency is 10,000 euros, equivalent to 10,800 dollars. Keeping more than this amount at home or in a safe deposit box is considered a legal violation.
Physical storage of banknotes also has risks such as theft, fire, deterioration over time, and the possibility of the banknote design or model becoming outdated over a long period.
The risks of holding cash also include buying fake dollars and a temporary drop in the dollar rate due to government intervention.
Bank foreign currency deposits: In Iran, most private and government banks offer the possibility of opening foreign currency deposit accounts with interest. The bank’s deposit certificate is secure, non-transferable, and tax-free.
If depositors give foreign currency to the bank, they can withdraw the same currency when closing the account.
Interest on these deposits must be paid in currency, but this must be agreed upon in the contract.
Therefore, paying attention to the contract when opening a deposit is very important and mandatory because, in the end, the customer’s currency may be calculated at the government rate and paid to them in rials.
It is also necessary to mention that if money is transferred to a foreign currency account from abroad through a currency transfer, these funds will never be paid by domestic banks to the account holder.
Instead, the amount of currency in the account is calculated at the lowest government rate for currency, whether dollars or euros, and paid in rials to the account owner.
Despite its high security compared to holding banknotes, deposits also carry risks. Among these is that six-month and one-year long-term deposits cannot be withdrawn before maturity. If the customer requests an early withdrawal and the bank can pay in banknotes, the deposit owner will be subject to a penalty.
Additionally, in critical conditions of dollar shortages in the country, banks may at times not have the ability to pay banknotes to customers.
During crisis conditions, banks can temporarily stop currency payments, as was the case in previous years, especially during the U.S. sanctions in the first term of Donald Trump’s presidency and the severe reduction in foreign currency resources entering Iran when banks were unable to pay banknotes to their customers.
Foreign currency deposits in Iranian banks earn low interest (below 6 per cent), but they still protect capital from inflation.
One risk, though unlikely, is that in extreme economic conditions or if a bank goes bankrupt, the central bank could order banks to stop paying currency for foreign currency deposits to support the economy or the government. In such cases, the currency in the account would be converted at the lowest government rate.
“I would rather negotiate a deal. I’m not sure that everybody agrees with me, but we can make a deal that would be just as good as if you won militarily,” Trump said.
“I would rather negotiate a deal. I’m not sure that everybody agrees with me, but we can make a deal that would be just as good as if you won militarily,” Trump said.
Donald Trump has written a letter to the Islamic Republic’s authorities seeking negotiations on a new nuclear deal.
“I would rather negotiate a deal. I’m not sure that everybody agrees with me, but we can make a deal that would be just as good as if you won militarily,” Trump said.
He added: “But the time is happening now, the time is coming up. Something is going to happen one way or the other. I hope that Iran - and I’ve written them a letter - saying I hope you’re going to negotiate because if we have to go in militarily, it’s going to be a terrible thing for them."
The letter comes as Iran has built a significant stockpile of highly enriched uranium since Trump withdrew from the previous nuclear agreement in 2018.
Russian Deputy Foreign Minister Sergei Ryabkov discussed international efforts to resolve Iran’s nuclear situation with Iranian Ambassador Kazem Jalali on Friday, according to the Russian foreign ministry.
The Trump administration has suggested that Russian President Vladimir Putin may serve as a mediator in the process.