Analyst: Currency price hike in favour of Iran’s economy
Azerbaijan, Baku, Dec. 23, Trend T.Jafarov /
The increasing prices of foreign currencies in Iran will be beneficial for the country's economy, Dr. Kamran Dadkhah, the economic analyst at the North Eastern University of Boston told Trend.
According to him, the foreign currency market in Iran is facing two major problems. Firstly, the government's irregular interference has kept prices low. Secondly, foreign currencies are sold at multiple prices. Except for recent years, they have been sold at multiple prices. This issue has led to losses for the government and corruption in the administration. It is a source of regret that the central bank has resumed selling currencies at multiple prices.
According to Iranian media, the dollar price which had hovered around 13,850 rials in recent days, hit a record high of 15,500 rials in Iran's free market.
This is despite the fact that the dollar price decreased yesterday and today, but the central bank sold the currency at 11,050 rials today, which was less than the free market's price by more than 4,000 rials.
At present, the dollar, the euro and the pound are sold in the free market at 14,230 rials, 18,800 rials and 23,450 rials, respectively.
Dr Dadkhah believes that the rising prices of goods, tensions in Iran-US relations and economic sanctions against Iran have increased gold and currency prices in that country.
He went on to say that removing subsidies has raised the price of goods. Considering the government had to use development budget resources and issue banknotes to pay cash subsidies, the inflation rate has surged considerably. So, it will be beneficial for the government to sell the dollar at higher prices and collect the issued banknotes as much as possible.
Based on the Statistics Centre of Iran, the inflation rate for the eighth calendar month of Aban (October 20-November 20) was 28 per cent compared to the month before. This is while the Central Bank put the inflation rate at 19.8 per cent. Of course, this is the official inflation rate. However, many analysts believe that the real inflation rate could be higher than the announced figure.
He went on to say that preventing domestic producers from bankruptcy is another reason for the rise in the dollar price. As a result of rising production costs and supplying Iranian-made products, the domestic market will be saturated with imported goods and many domestic producers will go bust. Therefore, the government should raise the dollar price in order to cope with the problem. Otherwise prices of imported goods will rise and prices of export-bound goods will fall. So, domestic producers can boost the power of competition.
Ayatollah Khamenei in a recent meeting with a group of entrepreneurs criticised irregular importations and called for optimising management in this field. He urged the government to modify the current laws aiming to supervise importations and improve businesses inside the country.
Statistics show that agricultural products accounted for the majority of Iran's imports in the first seven months of the current calendar year.
He pointed out that the government should allow the dollar price to be set in the free market. If so, it would certainly surpass 25,000 rials. This issue would be beneficial for Iran's economy. At present, the government pays subsidies to importers at the expense of using oil revenues.