TEHRAN, Dec. 22 (Xinhua) -- Iran's currency rate hit a new depreciation against foreign currency on Monday which is a sign of serious economic challenges that Rouhani's government is facing in the coming year.
The value of one U.S. dollar reached its highest over the past year and it was traded for about 35,500 Iranian rials on Monday on Tehran's street market, compared with the corresponding rate last year when one dollar was exchanged for about 29,500 rials, a 20.3 percent decline in the local currency value.
"Rouhani is elected by people and at the end of his work we can judge, on the basis of the figures, how much success he has achieved. But we hope he could be successful" in the fight with the problems he has faced since he came to the office last year, Mehedi, the owner of a car show in downtown Tehran, told Xinhua.
Presently, there is a depression in the car market in Iran for several reasons and his income has dropped by 30 percent, Mehedi said, adding that "no shopping for cars because people are in the state of instability."
"People are waiting for stability in the rate of the foreign currency and the inflation, then they may turn to the market," he said.
The gradual depreciation of rial began last November following the one-week meeting between Iran and the world powers in Vienna, which resulted in the extension of the deadline for Iran's nuclear issue for another seven months to June 30 next year.
The decline in Iran's currency value was further sped up after the ministerial meeting of the Organization of the Petroleum Exporting Countries (OPEC) in the Vienna on Nov. 27 could not reach an agreement to cut the crude output of the bloc to control the gradual falling trend of the crude price, from some 100 dollars in June to over 60 dollars a barrel recently.
Iran's annual budget heavily depends on oil exports which have also been under the western sanctions.
Instability in the currency market and the drop of local currency value, along with western sanctions, are major indicators of depression in Iran's economy, said Mr. Behesht involved in the business of machine-made carpets in downtown Tehran.
"Our business has been declined 30-40 percent this year compared with that of the last year," he said, adding that "Throughout the past year, our business was very sick."
Besides the low demand in the local market, exports also suffered considerable loss, Behesht said.
"Exports is a meaningless concept here," he said. "Now, we export only 500 to 600 pieces of carpets annually with much difficulty. This figure is very weak. We would like to have 40 pct of our business deals with foreigners, but unluckily it is just 5-10 percent."
The problem is linked to the issue of sanctions and the cost of exports is very high, the carpet businessman said, adding that "We cannot directly send carpets to our destinations, we need a secondly post. We send them to Dubai and in Dubai the cargo should be unloaded and reloaded onto another carrier, which takes time and inflicts high cost."
Business, this year, is not as good as previous years, and people have a tendency towards an austerity plan, also said an audio-visual equipment store boss, Mohammad. The users try to fix and maintain the old equipment rather than buying the new ones, he added.
The independent Iranian economic expert, Dr. Saeed Leylaz, told Xinhua in a recent interview that recent global oil price drop gives tough days for Iran's economy that has already been hammered by a host of domestic and international factors.
"The fall in oil price that we face is a very big problem and 40 percent decease in oil price means that hard currency income of the country (in the following year) will be less than one fourth in the year 2011," Leylaz said.
In 2011, Iran's income from oil exports hit some 120 billion U.S. dollars, the biggest in the history of the country, but it will be less than 30 billion dollars in 2015, Leylaz said.
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