Iran Central Bank issues $2 billion in bonds to collect float liquidity

Business Materials 16 October 2012 14:47 (UTC +04:00)

Azerbaijan, Baku, Oct.16/ Trend G.Mehdi/

The Central Bank of Iran has issued 25 trillion rials (some $2 billion) in bonds in a bid to collect a portion of the liquidity which is floating in society; the Fars News Agency quoted Central Bank Governor Mahmoud Bahmani as saying.

Excessive liquidity is one of the reasons for the fluctuation of foreign currency prices in the market, Bahmani added.

On October 9, the Central Bank announced that it will issue 100 trillion rials (some $8.2 billion) in the current Iranian calendar year which ends on March 20, 2013, the IRIB reported.

Liquidity in Iran is now around 3950 trillion rials ($322 billion) compared with 650 billion rials ($53 million) seven years ago, the Fars news agency quoted Iran's Majlis Speaker Ali Larijani as saying on September 25.

Parliamentary Economic Committee head Gholamreza Mesbahi Moqaddam said the subsidy reform plan put into place by the government has created $13 billion more in liquidity than was anticipated.

When the plan started in December 2010, it was expected to create about $32 billion in liquidity, Moqaddam said.

However, greater demand for the cash subsidies and the government's money borrowed from the central bank to pay for the subsidies led to $45 billion being in liquidity.