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The official inflation rate remains at more than 19 percent, while analysts argue it is significantly higher than that level. Subsidy cuts on food and energy that were pushed through Parliament last year by Ahmadinejad are very unpopular, and economists warned long before they were enacted that they could further stoke inflation. Since the cuts were implemented, food and energy prices have spiked. While Iranian economists, for now, argue that the latest sanctions may not be directly influencing the currency, the new measures add to already existing angst in the country. Banking analyst Farid Ziaolmaleki, in comments echoed by others, believes that more Iranians are turning to the currency speculation, buying up dollars, as inflation has outpaced the 12 to 15 percent interest rates offered by banks. Compounding the pressure on the riyal that such speculation could have, merchants have also taken to calculating the price of their wares in dollars, hoping for a steeper depreciation in the Iranian currency. Economic daily Donya-e-Eqtesad wrote in its Tuesday edition that "a big portion of merchants are not willing to sell their wares, and prefer to hold onto them until" the dollar strengthens more against the riyal. Another daily newspaper, Shargh, said that housing prices had increased by 25 percent in recent weeks because of the weakening in the value of the riyal. Even as Iranian officials argue the current currency pressure have little to do with the latest sanctions, other note that the threat last week to choke off the Strait of Hormuz was a factor. The warnings "cause reactions, and this was reflected on the currency," said Vahid Mahmoudi, a Tehran University professor of management.
[Associated
Press;
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