Iranian rial drops 7 percent after n-talks extension

Tehran, Dec 1 (IANS/EFE) The Iranian rial Monday lost 7.25 percent of its value after the announcement last week that the government's nuclear talks with the P5+1 group would be extended, ending hope of immediately lifting international sanctions on Iran.

An Iranian foreign exchange trader, on condition of anonymity, told Efe news agency that the dollar was trading at 32,400 rials and rose slightly Tuesday and Wednesday last week, but began to rise rapidly Thursday and reached 34,750 rials.

Customers have been flocking to exchange offices to trade their dollars because they know that the rate would go down again next week, said the trader, noting that nobody came to change last week as they were waiting for the nuclear negotiations to end.

Moreover, the euro exchange rate increased against the Iranian rial by almost 5 percent and it now stands at 42,600 rials in the informal sector, compared to 40,600 last week.

Iran also maintains an official rial exchange rate, which is used by banks and is usually one-third lower than that obtained in the currency exchange shops, set by the government. It was not affected by the talks deadline extension.

Iranian Economy Minister Ali Tayebnia said Sunday that the fluctuations in the currency market are "temporary", and noted that the rising value of the dollar is happening due to "psychological effects" related to the market.

The exchange rate will soon stop falling and "stabilise", according to Tayebnia's statements on state television Press TV.

Central Bank of Iran Governor Valiollah Seif also said that the Iranian markets would stabilise and that "certain information" is what affected the supply and demand factors and the exchange rate, according to the state news agency IRNA.

After seven days of intense negotiations in Vienna, Iran and the countries constituting the P5+1 block -- China, Russia, the US, France, Britain plus Germany -- decided to extend the talks until July to reach a final agreement that would put an end to 12 years of crises and hardships caused by the sanctions imposed on Iran.

--IANS/EFE

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