Foreign currency rate falls in Iran despite tenstions with US

Finance Materials 22 May 2019 15:33 (UTC +04:00)

Tehran, Iran, May 22


Iranian economist and university professor Vahid Shaghaghi discussed the fall of gold and foreign currency rate in the Iranian market in an interview with Trend.

Iran foreign exchange market faced sharp decline on rates May 20 and the trend continued on May 21, although the foreign currency rate jumped in previous days, presumably due to escalating the US-Iran tensions. However, in Shaghaghi’s words, after the situation calmed down to a certain extent, the market became more stable.

"The tension increased after the deployment of the US fleet in Persian Gulf, which made it possible the break of war between Iran and US or between Iran and other regional countries. However, Donald Trump and Mike Pompeo announced that the war with Iran is not military, but economic. The Supreme Leader also stated that Iran will not start the war," explained Shaghaghi.

At the same time, in his view, the most important reason for fall of USD rate in Iran foreign exchange market is the recent policy of Central Bank of Iran (CBI). As some economists believe, the level of CBI interference and pressure on the market in recent days is not comparable to any other time.

Head of Tehran's Gold and Jewelers Union Mohammad Keshti-Ara said that the trend continues with the prices dropping nearly every 15 minutes.

Shaghaghi also commented on the return of foreign currency revenues from exports. He said, “The volume of non-oil exports in last Iranian year (started on March21, 2018) was $44 billion. The most recently statistics issued by the Governor of CBI show return of $18.7 billion of foreign currency revenues."

Shaghaghi indicated that the will to return foreign currency revenues is not seen. "If $1.5 billion foreign currency revenues return to the country, it would have important effect on the market and economy. The news of launching the Integrated Foreign Exchange Market is also a positive sign. However, around $26 billion foreign currency revenues, which would balance the foreign currency rate in the country, have yet to be return to the system," he said.

"The Central Bank of Iran is also determined to implement tax on foreign currency and prepared a list of their buyers to avoid fraud in this field," Shaghaghi added.

Shaghaghi noted the CBI would not assign official foreign currency rate of 42,000 rial per dollar for imports to individuals who previously avoided return of exports revenues to NIMA system. "The strict approach of CBI in foreign currency has caused the government and parliament to make serious decisions to address the issue and punish those exporters that avoid return of foreign currency revenues," he said.