Iran minister: Currency market to stabilize

AP News
Posted: Dec 01, 2014 3:04 PM

TEHRAN, Iran (AP) — Iran's finance minister on Monday predicted the country's currency market will stabilize soon after recent fluctuations, the official IRNA news agency reported.

The report quoted Ali Tayyebnia as saying there have been no basic changes in either the Iranian foreign exchange or investment markets and that he expects the "creation of a stable situation" in the markets soon.

The remarks followed more than a 5-percent hike in foreign currency prices in less than a week. On Monday, the U.S. dollar was selling for 34,400 rials, up from 32,650 a week earlier.

Tayyebnia also warned against a panicked rush on the currency market, and asked for calm. "The changes in recent days were mainly based on apprehensions and psychological factors. People should not have frantic behaviors," he said.

The hikes came after Iran and world powers agreed to extend nuclear talks aimed at a final deal by July 2015. The West suspects Iran's nuclear program has a military dimension. Iran denies the charge, saying its nuclear activities are only for peaceful purposes, such as power generation and cancer treatment.

The rial's drop in value coincides with a plunge in oil prices; crude oil exports provide some 50 percent of Iran's budget.

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Also Monday, authorities allowed bakeries to raise the price of bread by about 30 percent, bringing it to about $0.37 from $0.28 per kilogram on average, local media reported. The administration said the raise met the demand from bakeries struggling to meet production expenses, including wages for their workforce.

It was the fourth time since 2010 that Iran had raised the price of bread as part of an effort to cut subsidies. The country annually pays some $2 billion in subsidies to keep the price of bread low.