Iran policymaker warns against multi-tiered exchange rate
Azerbaijan, Baku, July 4 /Trend M. Moezzi/
Iranian policy makers continue to debate what actions they should take in the face of spiraling inflation and the climb in the dollar's value against Iran's currency, the rial, Mehr reported.
Yesterday, Mohammad Nahavandian, a member of the Central Bank of Iran's Monetary and Credit Council warned against a multi-tiered currency exchange rate, saying it was legally prohibited.
On the same day, the Majlis Economic Committee said it was working on a three-tiered foreign currency exchange rate.
Right now Iran's officially-set exchange rate of 12,260 rials to the dollar is about 7,000 rials less than what the dollar costs in the free market.
Iran's Fifth Five Year Socio-Economic Development Plan (2011-2015) mandates that foreign currency's value be set through the floating exchange rate (which is determined by the market's supply and demand for that currency), said Nahavandian.
The Monetary and Credit Council member also advised that some banking restrictions be lifted for manufacturers. Given the financial difficulties Iran faces because of international sanctions, the focus has to be on reducing their effect on the economy.
Everyone shouldn't be punished because 5 to 10 percent of borrowers have misused the credit facilities they were offered, added Nahavandian.
Iran's economy is under pressure from international sanctions against the country's oil industry and its Central Bank. July 1 marked the start of the European Union's embargo against Iran's oil, adding even more stress to the country's economy.
The sanctions are part of an effort by the U.S. and to make Iran become more transparent about its nuclear development programme. Iran says its programme is peaceful and civilian in nature, while the West disagrees.