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Politics, religion, and culture where East meets West

Posts Tagged ‘rial

Rial continues to fall

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Just as a reminder, the currency war in Iran continues, in tandem with the ousting of al-Assad. From the San Francisco Chronicle (here):

TEHRAN, Iran (AP) — Iran’s currency hit a record low against the U.S. dollar in street trading, the semiofficial Mehr news agency reported Sunday.

Mehr says the rial dropped nearly 7 percent in a single day, to 24,300 rials to the dollar. Street traders say the rial rose slightly later on Sunday to around 23,900 rials to the dollar.

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Written by M. James

September 9, 2012 at 2:51 pm

Posted in News, Politics

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March 20th

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The Iranian view, from the Tehran Times (“Visions of violence in defense of the dollar“):

President Mahmoud Ahmadinejad has reiterated Iran’s willingness to resume negotiations with the Western powers and has even allowed a team of International Atomic Energy Agency inspectors to return to Iran. These inspectors may find some ambiguous, inconsequential shred of evidence, the significance of which may then be magnified to gargantuan proportions by the Western media, and held up as proof positive of the “smoking gun” confirming the existence of an Iranian nuclear weapons program. The inspectors will exit Iran and present their findings; there will be an exchange of charges and denials; ultimatums will ensue; and then Israel may make a provocative move. In an understandable and justifiable response, Iran may close the Strait of Hormuz, causing an anticipated 50% rise in crude oil prices, resulting in widespread economic havoc. Also, March 20, 2012, which is Noruz, the Iranian New Year, is the target date for the Iranian oil bourse to begin trading crude oil in currencies other than the U.S. dollar.

Meaning: On March 20th, Iran will stop trading oil in dollars entirely.

The dispute over Iran’s nuclear program is nothing more than a convenient excuse for the U.S. to use threats to protect the “reserve currency” status of the dollar. Recall that Saddam announced Iraq would no longer accept dollars for oil purchases in November 2000 and the U.S.-Anglo invasion occurred in March 2003. Similarly, Iran opened its oil bourse in 2008, so it is a credit to Iranian negotiating ability that the “crisis” has not come to a head long before now.

Europe is on the brink economic chaos due to the prudent monetary policies of the European Central Bank, which has refused to print money to buy government debt, quite unlike the U.S. Federal Reserve. Having been lured by cheap 1% bailout loans from the Fed to prevent government defaults, Europe caved in to the Zionist-inspired U.S. pressure and agreed to shoot itself in the financial foot by imposing oil sanctions on Iran, thus guaranteeing a European double-dip recession. For the U.S., however, these financial events help ensure that the euro will not pose the threat it once did to the dollar’s hegemony over oil transactions.

March 20th is also the potential date of the Greek default—pending the restructuring of a €14.5 billion bond repayment.

The possibilities are endless.

Written by M. James

February 19, 2012 at 9:47 pm

Iranian rial weakens

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Iran’s Middle Class on Edge as World Presses In
Robert F. Worth; The New York Times; Feb. 6, 2012

TEHRAN — One measure of the profound anxiety now coursing through Iranian society can be seen on Manouchehri Street, a winding lane at the heart of this city where furtive crowds of men gather every day like drug dealers to buy and sell American dollars.

The government has raised the official exchange rate and sent police into the streets to stop the black marketeers, but with confidence in Iran’s own currency, the rial, collapsing by the day, the trade goes on.

In an interview, Ali Akbar Javanfekr, an adviser to Mr. Ahmadinejad, also dismissed the sanctions as counterproductive, saying Iranians had suffered worse isolation during the 1980s and had always found ways around them. “This is not the way to approach us,” Mr. Javanfekr said. “You should instead speak to us with respect. You should win our heart.”

Some Iranian businessmen make similar comments, noting that there are always ingenious new ways to sell oil and to transfer money, and that the people who will suffer most from sanctions are not the ones who can pressure the government for change. “So you kill the pistachio trade in Iran,” one businessman said. “How does that stop nuclear enrichment?”

As I’ve argued already, the sanctions aren’t about stopping nuclear enrichment (or about pushing regime change)—they’re about dollarizing Iran by collapsing the rial. If the above reports are true, this attempt has already been met with some success.

Written by M. James

February 7, 2012 at 7:35 pm

Posted in News, Politics

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The currency war in Iran

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To reinforce my claims in a prior post, here is William Clark on “The Real Reasons Why Iran is the Next Target”—from 2004:

The Iranians are about to commit an ‘offense’ far greater than Saddam Hussein’s conversion to the euro of Iraq’s oil exports in the fall of 2000. Numerous articles have revealed Pentagon planning for operations against Iran as early as 2005. While the publicly stated reasons will be over Iran’s nuclear ambitions, there are unspoken macroeconomic drivers explaining the Real Reasons regarding the 2nd stage of petrodollar warfare – Iran’s upcoming euro-based oil Bourse.

Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. puppet in Iraq, establish multiple U.S military bases before the onset of Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency.

Similar to the Iraq war, upcoming operations against Iran relate to the macroeconomics of the `petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

But despite the fall from prominence of the Euro since the publication of the above article, Iran continues, to this day, to evade the dollar (Wikipedia outlines it well enough). For example, Iran is now “said to seek yen oil payments from India.”

Yet in the face of new sanctions, which include a ban on trading gold and silver with Iran (no surprise if this is a currency war), Iran has not yet dollarized. However, the rial’s ominous inflation rate does not bode well for its future. From Jeffrey Lewis, just yesterday (here):

Iranian President Mahmoud Ahmadinejad raised interest rates on Iranian bank deposits to up to 21 percent on January 23rd, according to the official Iranian news agency IRNA. Iran’s central bank also urged Iranians to buy U.S. Dollars only if they were traveling abroad and not to hoard them as a hedge against economic uncertainty.

The move by the Iranian central bank exacerbated the already steep plunge in the Iranian Rial, which has lost more than 50 percent of its value against the price of U.S. Dollars in the open market over the last month.

The ominous slide in the Rial began in April when the Iranian central bank decided to cut rates to a range of between 12.5 to 15.5 percent in April, prompting people to put their money in safe havens like precious metals and the U.S. Dollar. Inflation in Iran is currently running at 20 percent.

For more on the dollarization of Iran in its current context, see here.

Written by M. James

February 3, 2012 at 5:06 pm

Hedging against a new Iran

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Underlying the ramped-up rhetoric, military mobilization, and escalating espionage in Iran is a hidden economic war against Iran’s currency. The implication of this economic war is that the U.S. seeks to avoid military conflict with Iran. In fact, dollarizing Iran—which is what the U.S. is seeking to do with its economic sanctions—would be a hedge against an up-and-coming Iranian oil empire. Israel, unhappy with this prospect, seeks to start a conflict.

Iran’s nuclear program has received a lot of attention in the last few weeks. While this attention may accompany legitimate concerns—and this may be an appropriate time to voice such concerns—careful observers should be uneasy about the apparent convenience of focusing on the “Axis of Evil” at this time. With (1) an Iraq devoid of American police and (2) a stubborn Syrian regime that feels an increasing affinity toward Iran, Iran stands to gain a lot (see my previous post, “Why Syria?”). And if Iran stands to gain, then Saudi Arabia (and its oil hegemony), the United States (and its reliance on Saudi oil hegemony), and Israel (and its mere existence) have a lot to be afraid of.

The headlines of the past few weeks have, of course, demonstrated this fear. But there is one news item in particular that I’d like to point out, just as an example of the absurdity of the rhetoric. For some, it may be déjà vu, though it isn’t being reported that way:

Iran starts enriching uranium to 20 pct – IAEA

In summary: “The International Atomic Energy Agency officially confirmed that Iran has started enriching uranium to the 20-percent level…”

But this same headline can be traced back to at least February of 2010, almost two blissful years ago. Here’s one from May 17th, 2010:

Iran says will continue 20 percent enrichment

Notice the word “continue.” This is nothing new. Credibility is all but lost when old news becomes, when reprinted, a sign of “further escalation” (read: casus belli):

“This is a further escalation of their ongoing violations with regard to their nuclear obligations,” State Department spokeswoman Victoria Nuland told reporters.

Public subterfuge.

Cold War
As ZeroHedge artfully phrases it (here): “The geopolitical foreplay is getting ridiculous. At this point it is quite obvious that virtually everyone involved in the US-Israel-Iran hate triangle is just itching for someone else to pull the trigger.” And reading about the overt espionage, public subterfuge, and military muscle-flexing going on between the US and Iran, it may very well seem that itchy trigger fingers abound.

But while there are, quite clearly, warmongers in our midst, I don’t think it’s quite fair to characterize the standoff between Iran and the United States so simply. That’s because neither side really wants a war. Read the rest of this entry »

Written by M. James

January 19, 2012 at 2:03 am

Posted in News, Politics

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