Azerbaijan, Baku, April 25 /Trend S.Isayev, T. Jafarov/
Given the current situation in Iran, the thing that country's Central Bank would be most concerned about is to managing its reserves, and if it continues to do so, the inflation in the country will increase, Dr. Fereydoun Khavand, a professor of economics told Trend.
He was commenting on the recent changes in Iran's foreign currency, which has several different rates.
Officially, inflation in Iran is 31 percent, while unofficial sources claim it is over 40 percent.
Iran's inflation rate is the highest among the Middle East countries, Iranian parliament's research centre reported back in February.
According to the report, the country also was sixth on the list of countries with the highest inflation rate amongst the South-western Asian nations in 2012. The inflation rate in Iran is 4.3 times that of the average rate among South-western Asian nations, according to the report.
Speaking of the possible adjustment of Iran's currency rate, Khavand said that the government will probably settle for a rate that is higher than the official one, and lower that the one used on Iran's free markets.
"A possible option would to find a currency rate between 12,260 and 24,500 rials per dollar, since the government is afraid the gap might be too big," Khavand noted.
Iran's government recently said it will continue to provide U.S. dollars at a preferential rate (12,260 rials per dollar) to exporters of essential goods, contradicting earlier comments by ministry officials and parliament members who said the program had been revised.
"Officially, government said the rate could be around 18,000," Khavand said, adding that so far there has been no official statement on the possible currency change.
During the past 20 years, the Iranian government has adopted different policies toward imports. On November 9, the Ministry of Industry, Trade and Mine announced that imports of 77 items of luxury goods, categorised into ninth and 10th priorities had been banned. However, a few days later the ban was lifted from certain goods such as computers, cell phones and cars.
The government of President Mahmoud Ahmadinejad divided imported goods into 10 categories according to priorities based on which the official dollar rate of 12,260 rials will be allocated for importing the first and second priorities, while the third to seventh priorities will be allocated dollars at the Forex Centre rate (24,500 rials per dollar) and the goods of the eighth to the 10th priorities should be imported using the free market dollar rate (about 36,000 rials per dollar).
"There is a limited amount of foreign currency available, and this is a serious issue for Iranian government, that needs to be paid attention to," Khavand noted.
He further said that there's no choice in Iran because of the imposed sanctions, and thus the government of Iran has to keep the foreign currency for itself.
"If the goods are imported at an official 12,260 rate, then a lot of currency will be spent. If the goods are bought by the 24,500 rate then due to increased rate there will be less customers, and the Central Bank would be able to increase its reserves," Khavand explained.
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