Iran Sets Currency Rescue Ahead of Reimposed U.S. Sanctions

(Bloomberg) -- Iran plans to implement a new financial rescue package on Monday to try and halt the rial's decline, coinciding with the re-imposition of severe U.S. sanctions on the oil-rich state's economy after President Donald Trump pulled out of the Iran nuclear deal. 

The decision follows a week of sporadic protests against Iran's political and religious establishment as concerns over the economy mount. On Friday, one person was shot dead and 20 others arrested in the city of Karaj, west of Tehran, the semi-official Fars news reported. About 500 protesters in Eshtehard, a town west of the capital Tehran, used stones and bricks to smash the windows of a seminary and tried to set fire to its building, Fars news reported, citing local cleric Hojjatoleslam Hendiani.

Fars reported that a number of the protesters had been arrested by police who then went house-to-house trying to identify them.

Video posted to social media this week purported to show protests in various Iranian cities, including the capital Tehran. None of the footage can be independently verified but appeared to show people chanting against the government.

Iran is struggling to quell anger over rising prices while seeking to assure the public that it can successfully counter the economic crisis triggered by Trump's decision to withdraw from the 2015 nuclear accord. At the same time, its fighting to stem the rial's decline, which has slumped to record lows against the U.S. dollar since the start of the year amid protests.

Currency Steps

Iran's judiciary, legislature and government on Saturday approved plans by the Central Bank of Iran to strictly limit access to official, fixed currency rates to essential imports, the semi-official Iranian Students' News Agency reported. Also approved were measures to tighten the process of allocating foreign currency to businesses and crack down on corrupt practices and currency manipulation, it said.

Trump's sanctions will ban purchases of dollar banknotes by Iran, prevent the government from trading gold and other precious metals and block the nation from selling or acquiring various industrial metals. The measures also target the country's autos sector and will ban exports of Persian carpets and pistachios to the U.S.

A second round of sanctions targeting Iran's oil imports and energy and petrochemicals industries are scheduled to come into effect on Nov. 4. 

Details of the new measures will be discussed at a cabinet meeting on Sunday and then implemented after the head of the central bank announces them on Monday, first Vice President Eshaq Jahangiri told reporters, according to ISNA.

To contact the reporter on this story: Golnar Motevalli in Tehran at gmotevalli@bloomberg.net

To contact the editors responsible for this story: Steve Geimann at sgeimann@bloomberg.net, Keith Jenkins

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