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Persian Rug Prices Heading Up Amid Iranian Economic Woes
Thursday, August 28th, 2008

     Buyers may begin seeing changes in the retail prices of Persian oriental rugs very soon.  Two
factors are working against each other as the price of Persian rugs skyrockets upwards of a 500%
increase.
    The exchange rate of the American Dollar versus the Iranian Rial has ballooned to a high of
approximately 9500 Rials to every 1 Dollar.  This would normally drop the cost of Persian rigs
tremendously, but comes at a time when the Persian economy is collapsing.
    Iran’s government officials are set to cut several zeros off its currency as it battles double-digit
inflation, central bank vice president Hossein Ghazavi said in comments published on Thursday.
      A special committee has been formed within the central bank of Iran to manage the currency
change and the elimination of several zeroes," the financial daily Sarmayeh quoted Ghazavi as
saying.        
       "A 10,000 rial note has the same purchasing power now as 25 rials 30 years ago," he said. The
rial trades at 9,650 to the dollar now against just 70 at the time of the 1979 Islamic revolution.         
Ghazavi set no date for the currency reform and did not specify how many zeros the rial would lose
although the design of new high-denomination notes that the central bank has issued in recent
weeks has prompted speculation that it will probably be four.         
      The central bank has been eager to reassert its control of the money supply after annual inflation
hit 26 percent in June.         
      The expansionary economic policies of President Mahmoud Ahmadinejad have drawn criticism
from reformers and conservatives alike for stoking the rise in prices.  Last week, supreme leader
Ayatollah Ali Khamenei warned the president to rein back his plans so as not to further aggravate the
problem.         
      As the economy turns downward overseas, the price of Persian rugs continues to move upward,
forcing many oriental rug dealers to cut back on shipments.  Both the increased cost of rugs and the
lack of supply coming out of Iran has forced many dealers to be concerned about future Persian rug
prices.  Only time will tell the future of Persian rugs.