By Zoe Pollock
Graeme Wood ventured out to the Iranian resort island of Kish to understand the effect of American sanctions on Iran’s economy:
The Iranian rial trades semi-openly, and as this magazine went to press, its value was hovering under 40,000 to one U.S. dollar, weaker by nearly half compared with six months earlier. Authorities tried to ban currency trading for a few weeks in October, when the inflation rate peaked, but they failed. Finally they just asked money changers not to advertise the depressing new rates in their windows.
Wood’s First Rule of Budget Travel applies here: where there is runaway inflation, there are great deals for travelers with hard cash. … The first sign of rising prices was the hotel rate card. I had agreed over the phone to pay 370 dirhams, or about $100, for a night at a five-star hotel, including breakfast and lunch. (I had originally been told that the hotel had no vacancies, but when I asked again in English, with the implication of payment in foreign currency, a room materialized.) The rates for Iranians were quoted in Iranian rials, and to me—I had not been in Iran in more than three years—they looked not high but simply wrong. A zero in Persian writing is represented by a dot, and here I saw dots leading far off to the right, as if someone had left an ellipsis on the rate card instead of the full price. The Iranian price was 1.8 million rials.
Max Fisher has mixed feelings about taking a hyperinflation vacation:
Imagine the money in your wallet suddenly increasing value by a factor of four and a half — your nightly hotel budget rising from $70 to the equivalent of $340 — and you can see the appeal of a hyperinflation vacation.
Still, it feels a little weird to profit off of someone else’s pain. In this case, that someone is the entire Iranian middle and lower class. (Something Wood is very aware of and discusses with great care in his article.) The Post’s Jason Rezaian has reported from Tehran on the pain that ordinary Iranians feel from inflation, with everything from food to medicine becoming tougher to afford. And Wood points out that wealthy Iranians — those more likely to be affiliated with the regime, and thus desired targets of the economic sanctions driving so much of the inflation — are actually able to profit off of the inflation, for example with well-timed imports or by taking out the fixed-interest loans available only to those with political connections.
(Chart of the official Iranian rial-U.S. dollar exchange rate and the black market rates diverging by Steve H. Hanke of CATO)