Iran’s government pumped $305 million into the currency market over two days, after the currency, rial, fell to a historic low of 450,000 against the US dollar.

The Central Bank of Iran announced that the dollars were made available on Saturday and Sunday at a special currency scheme known as NIMA, which is set up for foreign currencies to be sold at a lower rate by exporters and for importers to buy what they need at the same low rate to finance their purchases from other countries.

The system was set up to make imports cheaper and control rising prices, after US sanctions in 2018 practically devalued Iran’s currency and led to very high inflation. The rial has lost value 12-fold in five years.

The injection of $305 million into the NIMA system indicates that there are not enough dollars from exports and the government had to satisfy demand.

However, the US dollar is set at 285,000 to the dollar in the special government scheme versus the free market where it is traded at about 450,000. The discrepancy between the two breeds corruption, as well-connected individuals and companies can buy cheap dollars through NIMA and instead of using it to finance imports, sell it on the currency market.

Numerous cases of such corruption have been revealed since 2018, when cheap dollars obtained from the government to import essential goods were used to import thousands of luxury cars, or simply nothing.

The government also regularly sells dollar through the free market to currency dealers to support the beleaguered rial. Usually, these interventions have a limited and temporary effect.

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