ShareTehran woos local investors with price and tax incentives
TEHRAN: Iranian women shop at Tehran’s ancient Grand Bazaar on Saturday. — AFPDUBAI: Iran's currency plunged to another record low on Sunday, dropping past 100,000 rials to the US dollar as Iranians brace for Aug 7 when the United States is due to re-impose a first lot of sanctions on their economy.
In May the United States pulled out of a 2015 deal between world powers and Tehran under which international sanctions on Iran were lifted in return for curbs on its nuclear program. Washington decided to re-impose sanctions on Iran upon its withdrawal, accusing it of posing a security threat, and has told countries they must halt all imports of Iranian oil from Nov 4 or face US financial measures.
Yesterday, the Iranian rial plunged to 111,500 against one US dollar on the unofficial market, down from about 97,500 rials on Saturday, according to foreign exchange website Bonbast.com. Other websites said the dollar was exchanged between 108,500 and 116,000 rials.
The rial has lost about half of its value since April because of a weak economy, financial difficulties at local banks and heavy demand for dollars among Iranians who fear the effects of sanctions.
US President Donald Trump has called the agreement one of the worst deals ever negotiated but in a bid to salvage the accord, Iran's European partners in the nuclear deal are preparing a package of economic measures to offset the US pullout.
However, France said earlier this month that it was unlikely European powers would be able to put together an economic package for Iran that would salvage its nuclear deal before November.
On Aug 7, the United States will re-impose sanctions on the purchase or acquisition of US dollars by the Iranian government, Iran's trade in gold and precious metals, and on the direct and indirect sale, supply and transfer to or from Iran of graphite, raw or semi-finished metals, coal and industrial-related software. Sanctions also will be reapplied to the importation into the United States of carpets and foodstuffs made in Iran, and on certain related financial transactions.
Iran's oil exports could fall by as much as two-thirds by the end of the year because of the new US sanctions, putting oil markets under huge strain amid supply outages elsewhere in the world.
Strategy
Meanwhile, Iran plans to offer price and tax incentives to private investors to take over idle state projects and help boost the economy, state media reported on Saturday, as the country faces likely US sanctions and the exit of many foreign companies.
The new Iranian plan, along with action against alleged financial crime, appears to be aimed at easing concern over the US decision.
The probable return of sanctions has triggered a rapid fall of Iran's currency, protests by bazaar traders usually loyal to the Islamist rulers, and a public outcry over alleged profiteering.
The plan will offer attractive prices and flexible terms as well as tax holidays for investors who agree to take over some of the 76,000 government projects which are unfinished or idle, Vice-President Eshaq Jahangiri said on state television. "Over the past few months, the country's liquidity has gone into housing, foreign exchange and gold coins, raising prices and provoking public concerns," Jahangiri was quoted as saying by the website of the state broadcaster.
"A main issue in the meeting ... was to find solutions to push liquidity towards employment and activating manufacturing," Jahangiri added after the meeting attended by President Hassan Rouhani, and the heads of parliament and the judiciary.
Pulling out
The sanctions start to come into effect in August but some European companies investing in Iran and with big US operations have already announced they will pull out of business deals with Tehran.
Judiciary spokesman Gholamhossein Mohseni Ejei said on Saturday that 18 people had been arrested over alleged profiteering from foreign exchange dealings and the illegal importing of luxury cars, state television reported.
In late December, demonstrations which began over economic hardship spread to more than 80 Iranian cities and towns. At least 25 people died in the unrest, the biggest expression of public discontent in almost a decade. Demonstrators initially vented their anger over high prices and alleged corruption, but the protests took on a rare political dimension, with a growing number of people calling on Supreme Leader Ayatollah Ali Khamenei to step down. - Reuters
