Baku, Azerbaijan, May. 16
By Khalid Kazimov – Trend:
Export Guarantee Fund of Iran (EGFI) will protect exporters against foreign currency fluctuations, an Iranian official said.
Mohammad Lahouti, the head of Iran Exports Confederation, has said that the EGFI will hedge foreign exchange depreciation of 3-35 percent for export commodities, Ibena (Iranian banks and economy news agency) reported.
Speaking about the recent decision by the government to cover the fluctuation risks, he said that foreign exchange fluctuations over the past several years have challenged the country’s economy, leaving negative impact on its exports and imports.
Iran-based Financial Tribune news website earlier reported that the currency market volatility in the final months of 2016, which saw the rial hit record lows against the greenback (reaching 41,500 rials to the dollar in the free market in late December), put the kibosh on the Central Bank of Iran’s plans to scrap the country’s dual exchange rate by the yearend.
According to the report, the business community and independent observers have made strong demands that the government unify the exchange rates and stop its forex market intervention for propping up the rial.
Forex hedging is similar to an insurance policy covering currency fluctuations for exporters. A foreign exchange hedge transfers the foreign exchange risk from the trading or investing company to a business that carries the risk, such as a bank.
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