Iranian
Rial Currency Targeted For Destruction
17
June, 2013
Effective
July 1st, the United States has authorized new sanctions directly
targeting the already-devalued Iranian rial with penalties for
transacting or holding the currency outside of Iran. This represents
the first time that the U.S. has focused specifically on the Iranian
monetary unit itself and the ninth set of sanctions President Barack
Obama has imposed against Iran.
White
House Press Secretary Jay Carney said, “This new action targets
Iran’s currency, the rial, by authorizing the imposition of
sanctions on foreign financial institutions that knowingly conduct or
facilitate significant transactions for the purchase or sale of the
Iranian rial, or that maintain significant accounts outside Iran
denominated in the Iranian rial.”
The
tough sanctions are intended to increase the financial pressure on
the Islamic republic to abandon its nuclear program. However, Iran
maintains that its nuclear energy program is for peaceful purposes
only and has refused to back down arguing that it has this right.
Carney
explained how the sanctions also target the foreign assets of Iran’s
leaders, “Further increasing the pressure on the Iranian
government, the Executive Order authorizes the imposition of
additional sanctions on persons who provide material support to
Iranian persons and certain other persons designated pursuant to Iran
sanctions authorities that are included on the list of Specially
Designated Nationals and Blocked Persons (SDN List) maintained by the
Department of the Treasury.”
The
Government of Iran’s leadership controls a vast overseas network of
37 private businesses for the purpose of managing off-the-books
investments that are shielded from the view of international
regulators.
This
month in exchange for pledges to reduce oil purchases from Iran, the
U.S. State Department renewed six-month waivers on Iran sanctions for
nine countries in total, including China, India, South Korea,
Malaysia, Singapore, South Africa, Sri Lanka, Turkey and Taiwan.
In
early 2012, the U.S. and the European Union imposed payment sanctions
on Iran’s oil and financial sectors with the goal of weakening
Iranian oil exports and blockading transactions with the Central Bank
of Iran via Swift. However, a European Union court in February ruled
against the EU banking sanctions imposed on one of Iran’s largest
banks, which extends to the payment sanctions imposed by Swift in
March of last year.
The
Iranian currency has already been suffering from record inflation
losing more than two-thirds of its value in the past two years,
trading at 36,000 per U.S. dollar as of April 30th, compared with
16,000 at the beginning of 2012.
“The
idea is to cause depreciation of the rial and make it unusable in
international commerce,” according to David Cohen, the Treasury
Department’s undersecretary for terrorism and financial
intelligence.
President
Obama issued this latest Executive Order on June 3rd and during an
interview Cohen said, “the purpose of the one-month phase-in period
is to give financial institutions currently holding rials the
opportunity to dump them.”
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