* Rial down 20 pct since central bank intervention last week
* Market rate vs dollar now 50 percent below official rate
* Iranians say "dollar" text messages blocked, officials
* One estimate puts inflation at 40 pct due to currency
By Mitra Amiri
TEHRAN, Jan 10 Iran's currency has slid 20
percent against the dollar in the last week despite central bank
intervention, and Iranians concerned about the economy said on
Tuesday attempts to send text messages using the word "dollar"
appeared to be blocked.
The central bank reportedly pumped $200 million dollars into
the market last Wednesday after new and much tougher U.S.
sanctions prompted nervous Iranians to change rials into hard
currency, accelerating a rise in the price of dollars on the
Saying it would act to stabilise the currency, the Central
Bank of Iran (CBI) imposed a rate of 14,000 rials to the dollar
- up from record lows of around 18,000 rials - but many exchange
offices would not sell at that price.
By Tuesday the exchange rate had risen again to around
17,000 rials, according to exchange bureaus, 50 percent more
than the CBI's "reference rate" of 11,240 rials.
The currency slide is a huge risk for consumer prices in a
country where the official inflation rate - considered an
underestimate by many economists - is already around 20 percent
In a hint of political sensitivity over the issue, Iranians,
long used to controls over Internet and mobile communications,
said they were unable to send text messages containing the word
"My colleagues and I tried to text each other in the office
and to our surprise we found that texts that included words like
'dollar' and 'foreign currency' could not be delivered," said
Malek, a 45-year-old government employee in Tehran.
Newspapers reported on the problem, adding that officials
had denied filtering text messages. Reuters calls to officials
The inflationary pressure comes a year after President
Mahmoud Ahmadinejad's government slashed subsidies on food and
fuel, sending historically cheap gasoline and utility prices
soaring. Items like food, clothes and electronics have also
become much more expensive to buy from abroad, and domestic
manufacturers will have to pay more for imported intermediate
The head of the Iran-China Joint Chamber of
Commerce, Asadollah Asgaroladi, estimated that annual inflation
stood at 40 percent this month and that it would have been 27
percent without the currency slide, Khabaronline, a website
close to the government, reported.
"I said earlier that if the government fails to control
inflation, implementing the subsidy reform plan would be
dangerous," Asgaroladi was quoted as saying.
The currency problem is a major political headache for
Ahmadinejad ahead of March 2 parliamentary elections, not least
because it could be seen as a consequence of the sanctions he
has long said would not hurt the economy.
CBI Governor Mahmoud Bahmani said the currency fluctuation
was a result of "psychological war" created by Iran's enemies.
The West has intensified sanctions on Iran in a bid to force
it to curb the nuclear work that many countries fear is aimed at
making atomic weapons. Tehran has repeatedly denied that charge,
but an official on Monday confirmed that the country had begun
enriching uranium, a key step in the process of producing a
On New Year's Eve, U.S. President Barack Obama signed into
law by far the toughest financial sanctions yet against Iran,
which if fully implemented could make it impossible for most
countries to pay for Iranian oil.
The Islamic Republic responded to the growing international
pressure by warning last week that it could shut the Strait of
Hormuz, the shipping lane for the Gulf's oil, if sanctions were
imposed on its oil exports.
Ahmadinejad has been at odds with the central bank governor
over the appropriate policies to control inflation, blocking him
from raising interest rates on bank deposits that were lowered
to below-inflation levels in April, prompting a progressive
slide in the rial.
The CBI said on Monday it would raise interest rates on
foreign currency deposit accounts but has yet to change the more
common rial account rates.