As rial crumbles, Iran rebuffs ‘speculation’ it may hold talks with US

Unconfirmed reports of a possible shift in stance on holding negotiations with US come as currency hits record low Monday with fresh sanctions near

Iranians walk inside Tehran's ancient Grand Bazaar in Tehran on July 28, 2018. (AFP/ATTA KENARE)
Iranians walk inside Tehran's ancient Grand Bazaar in Tehran on July 28, 2018. (AFP/ATTA KENARE)

Iran’s foreign ministry on Monday rejected reports it may be open to fresh negotiations with the United States, as the country’s currency hit a record low ahead of the re-imposition of US sanctions.

“The US or parts of the US may express wishes (about talks), but after the (US) illegal withdrawal from the JCPOA and their hostile policies and push for economic pressure on the Iranian nation, I think there is no such issue” in the works, the Tasnim News Agency reported spokesman Bahram Qassemi as saying.

The foreign ministry’s rebuke of “media speculation” came two days days after the influential parliament speaker, Ali Larijani, was quoted suggesting Iran could be open to talks with the US, if such a move has widespread backing from the country’s leaders.

Qassemi also dismissed any tie between a recent trip by the Foreign Minister Mohammad Javad Zarif to Oman and the Omani foreign minister’s visit to Washington last week.

Oman hosted Iranian and Obama administration officials during the negotiations leading to the 2015 nuclear deal meant to limit Iran’s nuclear program.

The visit has been seen by some as a sign that Oman is acting as a mediator between the US and Iran. Muscat hosted secret preliminary talks between the Obama administration and Iran’s leadership in 2011.

Larijani was quoted in unsourced reports on Saturday purportedly saying that if the entire Iranian establishment was in agreement, Iran could negotiate with the US. This unsourced quotation was repeated prominently on Israel’s Hadashot TV news on Monday evening.

Iranian parliament speaker Ali Larijani speaks during a press conference in Tehran, Iran, March 13, 2017. (AP Photo/Ebrahim Noroozi)

The unconfirmed reports of a possible shift in Iran’s stance on negotiations with the US have come as the free fall of its economy continued Monday, with the rial dropping to 122,000 to the dollar on the thriving black market exchange, from the previous low set the day before of 116,000 to the dollar.

In a statement dated Sunday, the central bank alleged the rial’s drop was the result of foreign conspiracies and said the currency’s weakness against the dollar was not a reflection of “economic realities.”

“Recent developments in the gold and forex markets are part of the conspiracies hatched by the country’s enemies in order to agitate the economy and rob the people of their psychological security,” the statement said, according to Radio Farda.

The central bank stressed it was “closely watching the developments.”

The sharp decline in the rial’s value comes ahead of the re-imposition of US sanctions on August 6, the first of two rounds of US sanctions that will take effect as part of US President Donald Trump’s May decision to quit the 2015 nuclear deal meant to limit Iran’s nuclear program.

The rial has lost half its value against the dollar in just four months, having broken through the 50,000-mark for the first time in March.

Iranian and US banknotes on display at a currency exchange shop in downtown Tehran, Iran, on April 4, 2015. (Vahid Salemi/AP)

The government attempted to fix the rate at 42,000 in April, and threatened to crackdown on black market traders.

But the trade continued with Iranians worried about a prolonged economic downturn turning to dollars as a safe way to store their savings, or as an investment in the hope the rial will continue to drop.

With banks often refusing to sell their dollars at the artificially low rate, the government was forced to soften its line in June, allowing more flexibility for certain groups of importers.

The handling of the crisis was one of the reasons behind last week’s decision by President Hassan Rouhani to replace central bank chief, Valiollah Seif.

The currency collapse was encouraged by the US announcement in May that it was pulling out of the 2015 nuclear deal, which had lifted certain sanctions in exchange for curbs to Iran’s atomic program.

The US is set to reimpose its full range of sanctions in two stages on August 6 and November 4, forcing many foreign firms to cut off business with Iran.

Already last month, protesters clashed with police outside parliament in Tehran amid three days of demonstrations sparked by the currency’s plunge, and worries are growing about what might happen once the new sanctions take effect next week.

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