28 Mar 2024
Sunday 11 November 2012 - 19:57
Story Code : 10259

Iran currency crisis likely to worsen GDP shrinkage: IMF

Iran currency crisis likely to worsen GDP shrinkage: IMF
By Bloomberg

Irans economy may shrink more than theInternational Monetary Fundforecast earlier this year because of weakness in the exchange rate, the fundsMiddle Eastchief said.

The most recent round ofcurrency depreciationand the associated uncertainty will likely have a further negative impact on economic outcomes in the coming year, Masood Ahmed said in a Dubai interview today, without elaborating. The Washington-based IMF estimates an 0.9 percent contraction this year based on data from before the currency declined, he said.

The Iranian rial has dropped about 40 percent against the dollar since August, and while the central banks inflation rate for September was 24 percent, economists say the measure may be three times higher. Iran has raisedinterest rateson deposits and opened an exchange center to stabilize thecurrency market.

Irans move to a flexibleexchange rate needs to be supported by tighter monetary policy and policy coordination to be able to contain the inflationary pressures that might come from it and to ensure that there is an orderly foreign exchange market, Ahmed said. The IMF plans to send a team to Iran in the first half of 2013 to evaluate its economy and foreign- currency reserves. The Economist Intelligence Unit estimates Irans foreign reserves will drop to $70 billion this year from $80 billion in 2011 as sanctions reduce oil exports.

The U.S. and the European Union are starving Iran of foreign currency by blocking sales of oil, its main export, and other transactions in dollars and euros.Israel, which has accused Iran of trying to develop atomic weapons, has threatened to attack to stop the Islamic Republics nuclear program if the sanctions dont succeed in curbing it.

Iranian leaders, who insist that their atomic work is peaceful, say they wont bow to the pressure even as crudeoutputplunges to the lowest in more than two decades.

 

The Iran Project is not responsible for the content of quoted articles.
https://theiranproject.com/vdci3raz.t1auw2lict.html
# Tags
Your Name
Your Email Address