Iran’s national currency plunged to its record low against the U.S. Dollar, following the implementation of economic sanctions by the Trump administration. The sanctions are expected to go live on August 7. Iranian Rial (IRR) is down by more than 50% since April, touching a low of 111,500 against one US dollar note. The previous recent low was about 97,500.
The government tried in vain to peg rial at 42,000. As the countdown for the sanctions has begun, Iranians are trying to protect themselves by investing on dollars, gold and even cryptocurrencies.
Notably, Iran’s central bank has banned cryptocurrency exchanges and their government has gone to the extent of censoring international crypto websites. The Iranian authorities are also taking action on those trying to bypass restrictions by acquiring gold and other precious metals in the black market.
Caught in between the depreciating domestic currency and stringent law enforcement agencies, some Iranians are desperately turning to Bitcoin and similar decentralized assets to escape the impact of sanctions. Since the day (May 2018) sanctions were announced, Bitcoin trading volume in Iran had skyrocketed. However, it is still lower than the peak trading volume recorded in December 2017.
Mohammad Reza Pourebrahimi, the Chairman of the Economic Commission of the Parliament of Iran, recently revealed that approximately $2.5 billion had been siphoned so far to buy cryptos.
While speaking to Iranian news agency ISNA, Alireza Daliri, deputy for management and investment at the Directorate for Scientific and Technological Affairs said
“We are trying to prepare the ground to use a domestic digital currency in the country. This currency would facilitate the transfer of money [to and from] anywhere in the world. Besides, it can help us at the time of sanctions.”
The government charges exorbitant fees on gold coins. Therefore, people are turning towards cryptocurrencies. The demand is so high that all cryptos offered for sale are sold in few hours. This includes even those cryptos which have a doubtful background.
A crypto currency investor in Iranian said “I’v never seen such demand, within hours coins are all bought up, even the s**tcoins.”
Black marketers who sell crytos are chargins $20,000 for one Bitcoin, almost twice the price they charged a month before. Notably, Bitcoin is trading at about $8,100 in global markets.
Similar to Venezuela, Iranian government had expressed interest in launching a government backed cryptocurrency. The Petro dollar issued by Venezuela is almost a failure, with price falling from $60 to $16.50 in the recent months. There is practically no demand for Petro in the global cryptocurrency exchange.
