DUBAI - Iran's economy minister cautioned against "frenzied behaviour" on Monday after Iranians sold rials for foreign currency over the weekend amid plunging oil prices and the prospect of several more months of economic sanctions.
The rial's free market rate against the US dollar opened slightly stronger at 34,900, according to Iranian currency trading websites, after declining by 2,100 on Sunday to 35,600. Sunday's rate was its lowest against the US currency in a year, according to Iran's Students News Agency ISNA.
Official media quoted Economy Minister Ali Tayyeb-Nia as saying: "There has been no fundamental change in the foreign exchange and the investment markets, and we expect to create a stable situation in currency and investment markets."
The official IRNA news agency reported him as adding that in the current situation, in which there had been no fundamental change, people should not exhibit "frenzied behaviour".
The Tehran Stock Exchange was up 0.03 per cent at 72,211.5, on Monday after falling 1.46 per cent to 72,189.5 the previous day, according to its website.
The rial has been hit by what OPEC member Iran sees as twin disappointments -- a dip in the price of oil, Iran's economic mainstay, and the prospect of more months of sanctions curbing Iran's ability to do business with the rest of the world.
Oil fell more than $2 a barrel to a five-year low in Asian trade on Monday, extending a steep sell-off after OPEC decided not to cut production last week, keeping markets well supplied.
Iranian Oil Minister Bijan Zanganeh said on Sunday OPEC's decision was not beneficial to all OPEC members, but Iran had refrained from protesting in order to maintain group solidarity.
Sanctions, imposed over Tehran's disputed nuclear programme, were kept in place last month when Iran and six powers failed to resolve a 12-year stand-off over Tehran's nuclear ambitions.
A weakened rial and lower oil revenues will likely create problems for President Hassan Rouhani, a pragmatist elected last year on a promise of economic prosperity through the resolution of the nuclear dispute and a subsequent removal of sanctions.
"Failure to control the forex market will undermine already very fragile business confidence and lead businesses to either preemptively raise prices or commence hoarding, as in the past," said Mohammad Shabani, an Iranian political analyst.
"This leads to added inflation on consumer prices."