Coll 28/39 ‘Persia: Printed Correspondence 1929-1936’ [‎173v] (357/1174)

„ ,, ,, , t1 ,„ fi „ t wee v in May the rates quoted by the Banks were
2. At the end of th ^ tQ )lie ' lld sterling, which was still above
about fifty-three and a Qt ared to sell foreign exchange at these
silver point, but the Ban . 11 t liug cou t d | |C purchased m the
rates. It became known ll0W ever that a reviv . l d of the u black
Bazaar at fitty-e^ht rial t^ ^ iLay gth to sixtJ ,. one point seventy-
bourse , tne tfaiuts rai t b the rate remained at a nominal sixty
five, during the ^^“^“f^inTas a rule ^prepared to sell large quanta
1 1 «s- - s^wsatRM
l , 1 C lv’.lti\ a hifLlXui Oslity nine was nxM on June 10th. At thm Sgmn
aaiiy until a mgn ie\ei o & £ e ^ to seventy-eight on June
“Ih^nd recovered^ eighty on the’ 13th. No rates have been published by the
12 tn ana ieco\ eieu iu j waolrc 3Tir i the Dosition remains uneertain.
I o* Zf, JS tt the Kational Bank M
b y tLt it would buy anv amounts of foreign exchange presented, but
IhTit w on d sell no more than It had bought, and that the transactions would
n based on the law of supply and demand. The newspaper naturally con-
tUSm^SSnSS^Mmm time to th. .««» that th. National B.nl
had very heavily oversold foreign exchange.
4 The Dresent situation is very unsatisfactory, as no one knows on what
basis exchange rates will be fixed, and there is a wide field for speculation, ihe
basis excnange iai s • ’ kilogram of fine gold was seventeen
thousand rials on June 7th, twenty thousand rials on June 10 th again seventeen
thousand rials on June 11th and fifteen thousand nals on June Wtk The
dpoarture from the silver standard is of course definite , silver rials are cJian p 0
hands at the frontier at a rate of about forty two to the pound or Ir aqian dinar,
and these latter can be readily reconverted into paper rials at profits ranging
hd to one hundred per cent. Silver rials still circulate m Tehran, but in the
provinces particularly near the frontiers, the National Bank have not been
issuing them and in many places they already command a premium. Consi
derable amounts of rials are being smuggled abroad.
5. It seems likely that the National Bank will, as soon as convenient, issue
token coins to replace the silver rials which are bound to disappear entire y
from circulation before long. Copper coins are already being minted for the
lower denominations, as reported by the Commercial Secretary under Over
seas Trade (B) No. 83 of April 17th last, and m addition a quantity of old
stock of copper coins was put into circulation at the beginning o ^ „
order for new bank notes which is expected to be placed m the very near future,
no notes of a lower denomination than ten rials are to be printed Ibis seems
to suggest that token coins will be issued in denominations up to live rials, ana
that the existing five rial notes will then be withdrawn.
6 A decision will have to be taken before very long as to the method ot
fixing the exchange value of the rial. The silver standard having been abon-
doned, the choice remains, as indicated m paragraph 4 of my despatch under
reference, between the gold standard, adherence to sterling, and a manage
currency.
7. I am sending conies of this desnatch to the Department of Overseas
Trade No. O.T. (B) 122 ; the Foreign Secretary to the Government ot India
Mr* lid • cmrl fn His Maifistv’s Ambassador at Baghdad, No. 42.
(49)
Despatch from His Majesty’s Minister,, Tehran, to the^ Foreign Office,
London, No. 300-E., dated the 12th July 1935.
In continuation of my despatch No. 261-E. of June 14th [Serial No. (48)1,
!. have the honour to report the following further developments in the Iranian
currency situation and in the situation of the National Bank.
2. In the course of a discussion in the Majlis on June 30th, proceeding the
re-election of Messieurs Farchi and Moayed Ahmadi as inspectors of currency
emission, a report was given by these two deputies on their work during the
past year. The note circulation had increased to four hundred and twenty-one
million, six hundred and fifty-three thousand, four hundred and fifty rials
! fon March 21 st, 1935), and the cover had never been less than the statutory