Iran's rial currency hits record low as shaky ceasefire with US and Israel holds
TEHRAN, Iran (AP) — Iran’s national rial currency hit a record low Wednesday of 1.8 million to the dollar as a shaky ceasefire with the U.S. and Israel holds.
The rial had remained stable in the early weeks of the war that began Feb. 28, in part because there was little trading or imports.
The rial began to slide two days ago. Experts warn that its fall is likely to further fuel inflation in a country where many imported goods, from food and medicine to electronics and raw materials, are affected by the dollar rate.
A U.S. naval blockade during the ceasefire has increased pressure on Iran’s already battered economy, cutting into a key source of government revenue and hard currency by stopping or intercepting oil shipments.
Pakistani Prime Minister Shehbaz Sharif said Wednesday his government was continuing efforts to help ease tensions between the U.S and Iran following an initial round of direct talks on April 11.
The latest slide of Iran's currency comes months after a currency shock helped fuel nationwide protests in January. At the time, the rial weakened from about 1.4 million to 1.6 million to the dollar in less than a week, deepening public anger over rising prices and fears about the country’s economic future.
Iran’s economy has faced decades of sanctions, chronic inflation and a widening gap between official and open-market exchange rates.
Prices of basic household goods had already been rising before the rial's latest fall, adding to pressure on Iranian families. Over the past two weeks, people buying daily essentials have faced higher prices for milk, yogurt, cooking oil, bread, rice, cheese and detergents.
The increases point to broader inflationary pressure in the economy driven by uncertainty, supply disruptions, higher transport and production costs and the continuing impact of the U.S. blockade. The rial’s latest slide is likely to add further pressure particularly on goods tied to imports, packaging and raw materials.
The economic pressure also has extended to the labor market. The reformist Shargh newspaper reported Monday that 500 workers at Pinak in Rasht and 700 workers at Borujerd Textile Factory had been laid off since the beginning of the new Iranian calendar year in late March after their contracts ended.
The reported layoffs add to concerns that rising costs, weaker demand and uncertainty after the war and blockade are forcing some companies to cut jobs or avoid renewing temporary contracts.
___
Associated Press writer Munir Ahmed in Islamabad contributed to this report.
© Copyright The Associated Press. All rights reserved. The information contained in this news report may not be published, broadcast or otherwise distributed without the prior written authority of The Associated Press.
