Iran’s national currency fell by six percent in a single day Wednesday after the president refused to sign off on a move to raise bank interest rates, state news agencies reported.

The semiofficial ISNA news agency said the rial was trading at 18,000 to the U.S. dollar on Wednesday on the black market, compared to 16,950 on Tuesday.
The Iranian currency strengthened last week after Iran’s Money and Credit Council approved an increase bank interest rates to 21 percent to absorb liquidity into the banks. Traders said President Mahmoud Ahmadinejad’s refusal to sign off on the new rates prompted a new devaluation of rial Wednesday.

The increase in the rate of foreign currencies accompanied reports of “widespread arrests” by security agents in plainclothes of currency exchangers in Iran’s black market.

Fars said currency exchangers in several streets in central Tehran were arrested by police and plainclothes security agents.

“Police have arrested all currency dealers …there is no purchase or sale of foreign currency (in the open market),” Fars news agency reported.

Iran’s central bank declared Monday that trading foreign currency outside of banks and licensed currency exchange operations was banned.

The currency came under heavy pressure after new U.S. sanctions targeting Iran’s central bank and oil industry were approved. Shortly after President Barack Obama signed the sanctions into law, the rial lost about 13 percent of its value relative to the dollar. The sanctions have not yet gone into effect.
Source : The Associated Press