Belgian banks are likely playing a major role in the weakening of the Iranian national currency, the rial.
The rial lost a shocking 40 percent of its value last week, leading to protests across the country as the Iranian government maintains its stance that sanctions and restrictions placed on its economy by the western world will have no impact on its economic health.
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One article, published on Quartz.com, cites a decision by the Belgium-based Society for Worldwide International Financial Transfers (SWIFT) as a major reason why.
According to the piece, the SWIFT cut off any dealings with Iranian banks blacklisted by the European Union. The rial began a steady decline in the aftermath of the SWIFT decision, which came just weeks after President Barack Obama signed an executive order increasing Iranian financial system sanctions.
And finally, the real coup de grace for the rial maybe related to the EU’s embargo on buying Iranian oil, which took effect in July. As a result, The Congressional Research Service says that Iranian oil exports are down from 2.5 million barrels a day in 2011 to just 1.4 million barrels a day in August 2012.
Oil sales are Iran’s major source of hard currency, economic activity and government revenue, meaning the rial has little to back it with Oil revenue in such rapid decline. With the Iranian currency reserve now in question, the Central Bank of Iran’s ability to regulate the rial’s value is mitigated.
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To read the full Quartz article, click here.
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