Baku, Azerbaijan, Dec. 9
By Temkin Jafarov, Umid Niayesh - Trend:
The Iranian administration controls both the supply of and demand for foreign currency in the country, former member of Iranian parliament, Ali Mazroui told Trend on Dec. 9.
"The oil revenues are the main source of foreign currency which is being supplied to market by Central Bank of Iran," he said, adding that the government is the only supplier of foreign currency in the country and can control foreign currency rates in the market by managing the supply.
Mazroui, who was a member of the Budget Commission of parliament from 2000 to 2004, also underlined the demand for foreign currency in Iran is from state-run companies.
Commenting on the MPs criticisms of Iranian economy minister, Ali Tayebnia, who resists action on the declining foreign currency rate in Iran, Mazroui said that some conservatives believe that the administration should intervene to control the forex rate in the market.
"While some experts are against direct intervention in the market saying that the administration only can manage the forex market indirectly," Mazroui said.
"In recent years the interventions in foreign currency market led to two different rates in Iran: official rate and free market rate," he added.
The Central Bank of Iran (CBI) has withstood conservatives` pressure to intervene in the market, Mazroui underlined, saying that the administration believes that the prices should be determined by the market.
The deal on the Iranian nuclear program between Iran and the P5+1 on Nov. 24 and society's optimistic mood had a temporary influence on the market causing prices to drop sharply, but the falling trend has not continued.
Iran's national currency the rial lost about 50 per cent of its foreign exchange value in less than a week in October 2012, standing at 35,500 versus the dollar. It was close to 10,000 in early 2011.
On September 24, while the free-market rate of the Iranian rial was rapidly following a downward trend the head of CBI, Valiollah Seif said that the U.S. dollar exchange rate in Iran is reasonable and any further fall in the rate will be harmful to the Iranian economy.
He made the remarks after the visit of President Hassan Rouhani to New York in September, which created a positive mood in the market.
His statements were criticized by some experts and MPs both reformists and conservatives.
On Sept. 25, Spokesman of the Iranian administration Mohammad Baqer Nobakht said, "The government insists that the exchange rate should remain stable. We are sensitive to price increases, but also sensitive toward sudden price drops. We need to instill stability."
The U.S. dollar free market rate hit 29, 480 rials in Iran on Dec.9, while the CBI set the official rate at 24,811 rials.
Edited by:C.N