Iran yanks favored exchange rate from students abroad

Thousands of Iranian students studying abroad are feeling the pain of new foreign exchange policies announced by the Central Bank of Iran in response to the rial's devaluation.

In January, one US dollar fetched 44,500 rials on the open market. Today, it takes more than 100,000 rials to equal one dollar. The government had long allowed students enrolled at universities abroad to obtain hard currency at a lower official exchange rate, after being approved through a process that involved multiple grueling steps. Among other conditions, male students also had to provide proof of having fulfilled their mandatory military service, and every student was required to sign a letter of commitment promising to work in Iran for up to six years anywhere the government placed them after completing their education.

At the end of the application process, students would be granted access to two $6,000 installments per year to help cover living expenses. An additional maximum of $15,000 was also made available to cover tuition fees, with the money transferred directly to universities. This option was, in effect, of no use for many students, given the banking issues due to US sanctions even before the United States withdrew from the Joint Comprehensive Plan of Action in May.

Amid an intensification of the rial's devaluation, leading to an increased divergence between the official and open market rates, First Vice President Eshaq Jahangiri on April 9 announced that Iran would unify the exchange rates, setting the price of a dollar at 42,000 rials. He added that the unified rate would apply for all Iranians, whatever their need for hard currency. This did not, however, materialize, but in effect brought the foreign currency market to a halt while giving rise to a black market with rates spiraled out of control.