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The Trump administration imposed a new round of sanctions on Iran on November 5, 2018 with the aim of reducing oil and gas exports and announced that these sanctions would be the most severe to date for the # 39; Iran. Thereafter, Secretary of State Pompeo announced that eight countries would be exempted from sanctions imposed by Iran for food and dietary reasons, but this exemption was temporary and would be subject to an immediate 40-50% reduction. oil purchases from Iran.
The Iranian regime, which was looking for an opportunity to take advantage of the wave of exemptions granted to the eight countries that bought its oil, used mass propaganda to make people believe that the United States had completely failed in the imposed sanctions. by Iran and that they would not disturb the foreign exchange earnings of Iran.
However, according to credible reports, after 5 November, the Iranian regime provided artificial respiration for its controlled economy by taking tens of millions of dollars from banks and injecting them into the market to absorb the shocks of sanctions. This, of course, in a context characterized by repressive activities of the military police, including daily executions, intended to create a climate of fear and intimidation.
Artificial decline of the dollar
The regime's officials in the Rouhani government are charged with artificially showing a low rate for the US dollar, even though trade has remained stagnant and has stopped. According to economic experts, bank overdrafts and artificial liquidity injections are not a sustainable solution and the regime can not continue to do so for long. In fact, experts say, this solution hurts osteoporosis in the fragile Iranian economy.
Now, while on the Tehran market, currency trading has virtually ceased, the regime is doing its best to keep the dollar artificially low in order to claim that the economic situation is normal and to deny the existence of foreign exchange. ;a crisis. .
Regarding the money injection project on the foreign exchange market, the Qods news agency, Tasnim said that the chairman of the specialized committee on gold jewelry had discussed the role of central banks in the liquidity injection into the currency market: "The main reason for the decline in dollars, the central bank's control over the exchange rate is achieved through a limited and continuous supply of foreign currency. Maintaining this trend would depend on the continued implementation of this policy. "
About the injection of public funds, an economic expert of the scheme told the public television channel on November 14, 2018: "Banks, because of commitments made to their depositors and their customers, in because of competition or for any other reason, have no other solution to this process and have entered a process of monetary creation. "
Kamran Nadri, economics expert and university professor, said on public television that the government had injected money: Yes, it seems that in the current situation, given the events occurred in the past banks have no choice but to continue creating. But until this process can continue depends on the central bank. Because now, by granting a line of credit to the banks, the central bank gives them the opportunity to continue their operations.
Failed efforts
On November 14, 2018, the Quds Force news agency wrote about the regime's repressive measures and intimidation measures to curb the situation: "In recent weeks, appropriate economic, judicial and security management has caused stability and the decline in money and coin rates.
Moreover, on November 14, 2018 also, a regime's economic media called Trade News, considered the regime's actions as temporal and wrote: The real impact of sanctions on markets, including coins and coins. currencies, will occur in December experience less expensive inflammation than before.
Euronews reported on November 15, 2018, citing market experts and activists, that widespread and widespread sanctions had shocked the market with reduced demand. Major market demand from business owners and importers has stopped in recent days. In fact, they are considering the possibility of continuing to trade with the global economy and finding less risky methods. So they stopped buying the currency.
On November 15, 2018, the website of the day's politics (Siasate Rouz) also wrote that some government media, following the execution of Vahid Mazlomin and Mohammad Esmaeil Ghasemi, amidst the propaganda of the stations State radio and television aimed at curbing the downturn in the foreign exchange market, reported the inefficiency of these executions. They said: "Despite the arrest and judgment of many traders in the foreign exchange market and the mobile phone market, the price has skyrocketed, and there is no intention to reduce it. "
As the regime tries to reduce the economic and monetary crisis by resorting to executions and repressing and injecting the dollar, an economic expert from the regime acknowledged that the central bank needed to "create money", said the November 14 on state television 2018: in the current situation, given the events occurred in the past, banks have no choice but to continue the process of monetary creation. We are now in a difficult situation and, in fact, the central bank's monetary policy in these circumstances must make difficult decisions, as it is confronted with giant liquidity and inflation, more likely rampant inflation.
He cautioned against the social consequences of bank non-responsiveness, adding: "If we want to close the central bank credit line with other banks and put an end to overdrafts, this can have social consequences. As a result, the central bank is in a difficult situation. Due to the evolution of the foreign exchange market, inflation expectations depend heavily on the exchange rate. We now have an inflation problem and a recession problem.
Inflation up
But the circuit of problems and solutions does not close in the financial system of the regime. According to BBC News and Euronews, the International Monetary Fund (IMF) released a report on Tuesday, November 13, predicting that the inflation rate in Iran would increase by 40% and that the unemployment rate would rise from 13% to 14%, 3% this year. year.
According to forecasts by the International Monetary Fund (IMF), the growth of Iran's GDP this year (2018) will be negative 1.5% and will worsen in 2019 to reach a negative rate of 3.6%. The figures provided by the economic experts are far from realistic, because the International Monetary Fund presents its report on the basis of official government figures.
In its new report, the IMF says: "Given the drop in oil exports and the heavy reliance of the economy on oil resources, the Iranian regime will only achieve a balanced budget if world oil prices do not rise. are not less than $ 100 per barrel. " At present, the price of oil is less than $ 70 per barrel. According to an official of the United Nations agency, one of the problems of the Iranian economy is the discrepancy between the official exchange rate and the informal market price.
According to the report, US sanctions significantly reduce Iran's oil production and exports for at least two years. Oil sanctions will raise oil prices in the short term, but in the medium term, because of the increased supply of oil producers, oil prices on world markets will fall. The price of oil is expected to be $ 68.76 per barrel for next year and $ 60 per barrel in 2023 (in five years).
The Brent which exceeded 86 dollars a barrel a month ago is now around 68 dollars.
Jihad Azoor, director of the IMF branch for the Middle East and Central Asia, said: "Our forecasts indicate that in Iran, this year and next year, we will see growth negative economic growth, price increases and inflation ranging from 35% to 45%, depending on the country. level of sanctions and their impact on different sectors.
He said about the impact of the recession in Iran on the Middle East countries: The Iranian economy is not integrated with the economy of the Middle East region and is not related. Even after JCPOA, commodity flows and financial flows between the two parties have remained very limited and we therefore expect a direct effect, neither in terms of impact on companies nor in terms of financial implications.
This is good news for the region, but not a good sign for the Iranian regime's ability to resist these sanctions. Time will tell us.
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Last updated: Sunday, November 25, 2018 KSA 12:36 – GMT 09:36
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