Tehran, Iran, August 6
By A. Shirazi - Trend:
The newly-appointed head of the Central Bank of Iran said licensed exchange offices in the country are no longer banned from buying and selling dollars and other foreign exchange currencies.
In a televised address, Abdolnaser Hemmati briefed the Iranian nation on the details of a new package of measures aimed at creating a floating mechanism for pricing the US Dollar in a bid to prevent further devaluation of its national currency, Tasnim news agency reported.
He added that trading dollars and other foreign currencies would no longer be considered “smuggling”.
“It was wrong from the beginning,” the CBI chief said about forbidding trade at the foreign exchange market.
On April 9, Iran’s first vice-president Eshaq Jahangiri said, “For us, any unofficial exchange rate on the market will be considered smuggling from tomorrow”.
The new currency policies will go into effect on August 7, he Hemmati noted.
The move is aimed at cutting off the hands of street dealers and eliminating black-market currency rates.
According to the new measures, the newly established secondary foreign currency market would be a reference source for determining the US dollar price.
To the same effect, it would ban the Central Bank of Iran (CBI) from dictating its own rates for the dollar and would instead peg the value of the hard currency to the actual trading rates as obtained from current transactions between currency suppliers and buyers.
Based on the same package, the rate of the hard currency could fall to as low as Rials 80,000 to 85,000 from the current highs of above Rials 10,000.
One of the main reasons behind the recent fluctuations in Iran’s foreign exchange market is due to fears of new US sanctions scheduled to kick in in August and November.
US President Donald Trump withdrew from the Iran nuclear deal in May, and Washington now plans to reimpose sanctions on Tehran next month. The first round of US sanctions on Iran goes into effect in August, followed by ones targeting Iran's oil exports in November.
On concerns over a return of sanctions, the rial plunged to an all-time low on April 9. In an attempt to stop the fall, the administration of President Hassan Rouhani held an emergency meeting and decided to unify the country’s official and open market exchange rates.
Following the meeting, the government announced the price of the dollar would be 42,000 rials in both markets, and for all business activities.
The move by the government failed to bring back clam to Iran’s foreign exchange market as prices continued their skyrocketing trend. Later, the government launched a secondary currency market to ease tensions around the prices of the US dollar, but after a while it also failed to stop the Iranian rial plunge to a record low.