• Beleaguered rial hits 500,000 against US dollar in open market

• Central Bank to limit sales of euros to air travellers only

By Golnar Motevalli and Arsalan Shahla

Iran has introduced fresh restrictions on foreign currency sales after a rush on euros and dollars weakened the rial to an all-time low of 500,000 against the greenback.

The Central Bank of Iran said that from Tuesday it would scrap a scheme that allowed people to buy up to 5,000 euros ($5,324.3) per year from authorized sellers and replace it with a more stringent annual allocation of 500 euros for air passengers, the semi-official Tasnim news agency reported. 

The move comes after foreign exchange sellers in downtown Tehran became inundated with customers seeking to purchase their annual allotment of euros as the end of the current Iranian calendar year nears. 

The rial, which has hit successive record lows since the US abandoned the nuclear deal in 2018, hit a new all-time low of 500,000 against the US dollar on the unregulated, open market on Monday, according to several traders in Tehran. 

Iran's Tanking CurrencyThe rial has lost more than 50% of its value against the US dollar since Ebrahim Raisi was elected president.

The latest currency turmoil comes as the heavily sanctioned leadership of the Persian Gulf state faces unprecedented levels of public dissent and is increasingly isolated from the global economy. Talks with world powers to revive the nuclear deal, which would loosen sanctions on vital oil exports, also remain indefinitely stalled and inflation has reached near-record levels over the past year.

Scuffles were seen outside one exchange office around midday on Monday as people tried to push past security guards. One man was seen restraining another customer by the neck as they jostled while waiting in line.Late on Monday the CBI also announced a “new package for the dollar” inspired by Russia’s efforts to defend the ruble and support its value after it was heavily sanctioned over its invasion of Ukraine. 

The package involves the CBI holding onto foreign-currency revenues accrued from exports in industries such as mining that have access to heavily subsidized fuel, Tasnim reported.