Iran's president confirmed that sanctions are reducing imports and exports. This marks the first time in history that economic sanctions have successfully sanctioned an economy. Groundbreaking stuff.
Supreme Leader Khamenei responded by urging less reliance on the U.S. dollar. A brilliant pivot. Nothing solves a trade collapse faster than switching currencies while nobody wants to trade with you. It's like redecorating your house while it's on fire.
Retail traders saw this headline and immediately started googling "how to short the rial." They cannot short the rial. They do not know this yet. They will spend forty minutes on Reddit before someone explains that their TD Ameritrade account does not offer Iranian currency pairs. They will feel betrayed by America.
The supreme leader's plan to reduce dollar dependence would be more compelling if Iran's trade partners were lining up to accept payment in anything else. They are not lining up. They are in fact standing very far away from the line. Some have left the building entirely.
Khamenei's monetary sovereignty pitch assumes Iran can simply opt out of the global reserve currency because it feels like it. That is not how reserve currencies work. You cannot replace the dollar by declaring you are replacing the dollar. If it were that easy, every country with a shit currency would have done it already.
The president says sanctions are hitting trade. The supreme leader says ditch the dollar. Neither of them mentions that the sanctions exist because of specific policy choices Iran made and continues to make. Weird omission.
Somewhere in Tehran, a central banker is updating his resume in English, pricing his skills in dollars, and wondering if Switzerland is hiring.
Photo by Amin Zand Miralvand on Unsplash
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