An Investigation of the Most Important Factors Affecting the Currency Crisis in 2018-2019

Document Type : Original Article

Authors

1 Corresponding author: Assistant professor at Imam Hussein Comprehensive University

2 Assistant professor at Imam Hussein Comprehensive University

3 Master of economics, Imam Sadegh University

Abstract

Currency crisis, including sharp, continuous and unconscious rise in the exchange rate is considered as a threat to the economy and economic security due to its overwhelming effects on economic main indicators, especially on inflation and destabilization. Currency crisis has occurred in several eras regarding the Iranian economy, the most recent and perhaps most important of which occurred in 2018, imposing continues far-reaching political, security and economic consequences. Investigating the causes and factors of this crises and identifying the roles of each of these factors are vitally important, and will result in the persuasion of a stable economic governance. Hence, this research is intended to have an attempt to identify the importance and weight of each factor using the focus group method by interviewing experts and agents dealing with the causes affecting this phenomenon. The results indicated that, although the return of US unilateral sanctions by Trump in 2018 imposed negative effects on Iran’s exchange market, the most important factor in the currency shock of 2018 was due to the Iranian central bank's withdrawal from foreign exchange market. Following it, the incorrect policy and wrong decision of setting a fix rate of 42000 Rials for an American Dollar at the beginning of 2018, increased the demand for foreign exchange without return, and hoarding of foreign exchanges by major exporters that mainly depended on the government.

Keywords

References

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Security Horizons
Volume 13, Issue 48 - Serial Number 48
Quarterlyautumn
November 2020
Pages 51-76

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History

  • Receive Date: 08 April 2020
  • Revise Date: 24 August 2020
  • Accept Date: 18 October 2020
  • Publish Date: 22 October 2020

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