Rial rebounds and stocks soar, but Iranians still grapple with high prices
While the stock market surges and the US dollar plummets after an initial US-Iran agreement, Iranians are still waiting for relief at the grocery checkout
While the stock market surges and the US dollar plummets after an initial US-Iran agreement, Iranians are still waiting for relief at the grocery checkout. The value of Iran’s currency has risen by more than 15 percent against the US dollar, and its stock market has shattered records in the wake of the memorandum of understanding agreed between the United States and Iran on Sunday. However, Iranians suffering for years from extremely high inflation and a plunging rial have found little economic relief as the prices of basic goods, such as food, remain high despite the diplomatic breakthrough. The Iranian economy has suffered due to decades of US sanctions. The economic crisis was exacerbated after the US and Israel launched a war against Iran on February 28. As subsequent US naval blockade on Iranian ports further added to the misery of Iranians. In Ferdowsi Street, the beating heart of Tehran’s foreign exchange market, the scene on Thursday was a stark departure from the panic of recent months. Exchange office boards flashed rapidly changing numbers as foreign currencies, led by the dollar, took a sharp dive. “We closed our doors just hours before the official announcement of the US-Iran understanding at a rate of 1.8 million rials to the dollar,” Amir, a 35-year-old exchange office worker who asked to remain anonymous, told Al Jazeera. “Now it has fallen to 1.54 million rials, and we expect further declines.” Amir noted a significant increase in sales volumes although buyers remained scarce as many anticipated the rial would strengthen further, potentially dropping to 1.4 million to the dollar or lower.
The recent gains mark a sharp turnaround. After the outbreak of the war, the exchange rate jumped to a historic peak of 1.9 million rials (190,000 tomans) to the dollar in March before settling at about 1.685 million just before recent attacks carried out despite a ceasefire. A disconnect in the grocery aisles Despite the rial’s recovery, a walk through Tehran’s grocery stores reveals a starkly different reality. For Iranians grappling with the economic fallout of crippling sanctions and the US naval blockade, the diplomatic thaw has yet to lower the cost of living. Reza, a 42-year-old Tehran resident, told Al Jazeera that prices for daily staples like milk, cheese, cooking oil and flour remain unchanged. “They say the dollar dropped, but my shopping basket costs the same as last week,” he said. “This means the agreement hasn’t reached our pockets yet.” From behind the cash register, 55-year-old shop owner Ramin echoed his customer’s frustration. He explained that while the government continues to distribute subsidised goods like bread, the fluctuations of the free-market dollar do not immediately impact basic food prices. The value of the dollar on the free market varies from the official exchange rate. Pointing to a shelf of imported goods, another shopkeeper named Karim noted that items like shampoo, toothpaste and laundry detergent are still locked at inflated prices. “Distributors say they bought these goods two months ago at the old dollar rates,” Karim explained. “Prices will remain high until the old stock runs out and new goods enter at the lower exchange rates.” He estimated it would take at least two weeks for the market to adjust, meaning Iranians will continue to face compounding inflation in the interim.
The BriefWire