The Latest from Iran (7 August): The Currency "Situation"

See also Iran Propaganda Special: "Zionists Will Stage Terror Attack on Olympics"
The Latest from Iran (6 August): Breaking Ranks

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2030 GMT: Foreign Affairs Watch (Turkish Front). After tension between Turkey and Iran over the last 48 hours, all was very diplomatic in Ankara today between Iranian Foreign Minister Ali Abkar Salehi and his Turkish counterpart Ahmet Davutoğlu today. According to Iranian State news agency IRNA, Salehi asked Davutoğlu to help in the case of 48 Iranians abducted in Syria on Saturday, and both men spoke of the close relations and interests between the two countries.

1810 GMT: Loyalty Watch. Of 290 MPs, 227 have released a statement praising the success of Iranian intelligence forces in the identification and detention of all "terrorists" behind the assassinations of nuclear scientists: “The arrest of all terrorists behind the assassination of Iranian experts and nuclear scientists, despite all its complexity and intricacy, is yet another golden page in the history of Iran's Intelligence Ministry."

The statement continued, “The Majlis lawmakers hereby express their gratitude over the activities of the Intelligence Ministry, and voices its staunch support for the relentless efforts made by the Iranian intelligence forces to counter the global arrogance agents.”

It is not known what happened to the 63 MPs who did not sign the statement.

1610 GMT: Foreign Affairs Watch (Syrian Front). A site linked to the Revolutionary Guards has asserted that if any of the 48 abducted Iranians in Syria are harmed, the Islamic Republic should be ready to confront the US directly.

1431 GMT: Foreign Affairs Watch (Egyptian Front). Tehran is trying once more to get Egyptian President Mohamed Morsi to visit the Islamic Republic, sending Vice President Hamid Baghaei to Cairo on Tuesday.

Baghaei will invite Morsi to the Non-Aligned Movement summit in Tehran at the end of August.

While the Egyptian President has so far rebuffed Iran's approaches --- as well as false declarations in Iranian media that he had accepted invitations --- he has twice visited Saudi Arabia since he took office in June.

1408 GMT: Currency Watch. The Iranian Rial has fallen another 3% today is now at 21930:1 vs. the US dollar.

1341 GMT: Ahmadinejad Watch. Speaking on Journalists' Day, President Ahmadinejad has made a veiled reference to the detention and filtering of bloggers who support him: "We should defend the rights of bloggers to operate in cyberspace."

1326 GMT: Economy Watch. Press TV summarises the Supreme Leader's latest economic lesson, "West Economic Woes Stem from Capitocracy".

More significant, as Ayatollah Khamenei addressed students, was his attempt to convert the Islamic Republic's economic problems into a show of strength: "The resistance economy does not mean defensive measures and building a fence around oneself; rather, the resistance economy is an economy which prepares the ground for the progress and flourishing of a nation even in times of pressure and sanctions."

1308 GMT: Sanctions Watch. More than £11.5 billion ($18 billion) has been wiped from the stock market value of London's Standard Chartered Bank after the allegation of a New York court that the bank had laundered $250 billion through the Iranian financial system between 2001 and 2010.

By midday Tuesday in London, shares in Standard Chartered had fallen 24%, following a 6% drop on Monday.

1201 GMT: Regrets? The Supreme Leader has criticised those who stormed the British Embassy in Tehran last November. Ayatollah Khamenei said he understood the feelings about the "wicked" embassy, but the assault was not correct: "I disagree with the extremism."

After the incident, Britain withdrew its diplomatic personnel from Tehran and expelled Iranian diplomats from London.

1104 GMT: Foreign Affairs Watch (Syrian Front). Arriving in Damascus for talks with Syrian officials, high-ranking Iranian official Saeed Jalili has declared, “The Islamic Republic of Iran believes in a Syrian solution based on national dialogue among all Syrian groups to settle the country’s issues, and does not consider foreign approaches as useful."

Jalili, the Secretary of the National Security Council, also spoke of last Saturday's seizure of 48 Iranian men by insurgents, “We hold all those who fully support the Syrian terrorists responsible for the abduction of the Iranian pilgrims and use all the capacities to secure their release.”

(Cross-posted from Syria Live Coverage)

0841 GMT: Foreign Affairs Watch (Syrian Front). A rush of activity among high-level Iranian officials --- the Secretary of the National Security Council, Saeed Jalili, was in Lebanon on Monday and is reportedly heading to Damascus, while Foreign Minister Ali Akbar Salehi is visiting Turkey today.

0833 GMT: Currency Watch. Speculation is growing that the Central Bank will announce a significant "adjustment" of the official exchange rate, which is currently at 12260 Rials to the US dollar.

Observers such as the head of Bank Tejarat are predicting a new rate between 15000:1 and 16000:1. This would still leave a gap of 35-40% with the open-market rate of 21300:1.

Meanwhile, political bickering continues. Arsalan Fathipour of Parliament's Economy Committee has declared strong opposition to a single exchange rate. Fathipour warned that, with the Rial falling below 20000:1 and maybe 30000:1 vs. the US dollar on the open market, food prices will further increase and Iranians' purchasing power will decline.

0709 GMT: Foreign Affairs Watch (Syrian Front). Speaker of Parliament Ali Larijani, addressing the Majlis about the abduction of 48 Iranians in Syria and the reported deaths of three of them, has said that the US and "some states in the region" will "receive an answer to violence against pilgrims in due time".

The Foreign Ministry has summoned the Swiss charge d'affaires, who represents US interests, to send the message that Washington is responsible for the lives of the Iranians. It called on the US to use its influence on the insurgents in Syria to free the men "without any preconditions".

General Hassan Firouzabadi, the head of the armed forces, has added his denunciation of Turkey, Saudi Arabia, and Qatar as those "responsible for bloodshed in Syria".

0705 GMT: Foreign Affairs Watch (Syrian Front). Deputy Foreign Minister Hossein Amir-Abdollahian has said President Assad has "no time to attend" the meeting of the Non-Aligned Movement in Tehran at the end of the month, but "maybe he will come anyway".

0617 GMT: Sanctions Watch. The British-based Standard Chartered Bank has been accused by a New York regulator of laundering as much as $250 billion through Iran over nearly a decade.

The New York State Department of Financial Services said the bank hid 60,000 secret transactions for "Iranian financial institutions" that were subject to US economic sanctions.

The bank has been ordered to appear before the regulator to "explain these apparent violations of law" from 2001 to 2010.

Standard Charter is accused of falsifying SWIFT wire payment directions by stripping the message of unwanted data that showed the clients were Iranian, replacing it with false entries. Senior management were also said to have codified their illegal procedures in formal operating manuals, including one labelled "Quality Operating Procedure Iranian Bank Processing".

In March 2001, Standard Chartered's legal advisor counselled that "our payment instructions [for Iranian clients] should not identify the client or the purpose of the payment".

0610 GMT: Foreign Affairs Watch (Syrian Front). Deputy Foreign Minister Hossein Amir Abdollahian, responding to reports that three of 48 abducted Iranians had died during a Syrian air raid near Damascus, said:

We hold the Turkish government responsible for giving shelter to these armed groups and also if a criminal act is carried out by these groups, such as kidnapping Iranian citizens.

We also hold the Qatari government accountable. It is worth mentioning that the US is openly supporting the armed groups with ammunition.

Today we sent a formal memoir to the interest section of the US government in the Swiss embassy, saying we hold Washington responsible for securing the lives of our nationals in Syria.

0530 GMT: Last week one of EA's Iranian correspondents, noting the Iranian Rial had fallen below 19000:1 vs. the US dollar on the open market, asked if  I thought this was a currency crisis.

My preference was for caution. The Rial had sunk 80% between last September and the start of 2012, dropping as low as 22000:1 vs. the US dollar, but Government and Central Bank intervention had brought some recovery, even if it had failed to enforce the official rate of 12260:1. The Rial was boosted to a high point of 15600:1 this spring.

In the last two months, the currency had been slipping, however. Even more importantly, the effects of the instability were being felt in areas such as imports, where higher costs were damaging Iranian industrial and agricultural production. Far from unifying the exchange rate, the Central Bank was pushed to introduce a three-tier system, effectively subsidising "basic" and "capital and intermediate" imports.

So I said to the correspondent, "If the Rial reaches 20000:1, this will be a 'situation'."

This morning, after a 5% drop on Monday --- with reports that the plunge was 8% at one point, with exchange offices refusing to sell US dollars --- the Rial is at 21300:1.