Tehran, Iran, Oct.7
Trend:
There is no doubt that there are many governments and institutions that support the intensification of currency problems or even intervene in that, professor of Political Economy at Stockton College, New Jersey told Trend.
Reza Qureishi in his assessment of the government's performance against the fluctuations in the foreign exchange market told Trend that given the very limited external facility due to sanctions and internal facility due to lack of control over the products, institutions, foundations, and semi-privet sectors, he considers government performance to be acceptable.
The government's priority is to provide 42,000 rials for a dollar for the import of 25 items of basic commodities and raw materials for industry. The government cannot or maybe do not have enough foreign currency to keep the rates low.
Since the beginning of this year the Iranian rial has depreciated by nearly 70 percent against its benchmark.
Most observers have described this as the effect of rising tensions in US-Iran relations, particularly the US’s withdrawal from the landmark 2015 Iran nuclear deal, known as the Joint Comprehensive Plan of Action.
Citing to some criticism regarding the government’s intentional role in raising the exchange rate he argued that since the government is the main source of supply of the currency to the market (through oil and petrochemicals), rising exchange rates raise its rial revenues, which could be an incentive. There is no doubt that a major factor in rising the exchange rate is falling supply.
"But it's different," he said, "to say that the government is behind the rising of the currency, because such a policy has a disadvantage. I am not in a position to strongly say that the government has intentionally made the currency expensive, but I suspect that such a policy has been deliberately employed. I consider the lack of injecting the currency into the market from the state due to the priorities as the main factor.”
The Iranian central bank in an statement published on July 30 has blamed “enemies” for the fall of the currency.
Referring to the role of foreign countries intervention in currency fluctuations, the professor of political economy said that there is no doubt that there are many governments and institutions which support or even intervene in the intensification of currency problems. “I am not in a position to know how much interventions, I'm sure, they are not ineffective, but are they the major cause of this problem? I doubt.”
The Central Bank of Iran (CBI) recently has eased currency rules and ordered the customs to allow merchants to bring foreign currency banknotes or gold into the country in a bid to curb further depreciation of the rial.
"Of course, currency imports are helpful, but I suspect that a high and significant amount of currency will enter through this path," he said.