Will Iran unify exchange rates at expense of rial's value?

Will Iran unify exchange rates at expense of rial's value?

Baku, Azerbaijan, Sep. 12

By Farhad Daneshvar – Trend:

The recent remarks by a senior financial official on Iran’s plans to unify the country's official and open market exchange rates have sparked off heated media debates.

While the critics of the plan have voiced concerns over a possible devaluation of the national currency, rial, the government says that it will not allow rial lose its value against the foreign currencies.

Gholamali Kamyab, the foreign exchange deputy at the Central Bank of Iran (CBI) suggested on Monday that his organization may adopt its policies on the unification of the exchange rate as of March.

"The Central Bank has no accurate time schedule for implementing the plan on unifying the currency rates but considering the existing plans, the implementation would begin by the end of the current (Iranian calendar) year (starting March 20)".

Gholamali Kamyab further added that the CBI’s decision on the elimination of the travel currency, subsidized dollars for travelers, was in line with the plans on the unification of currency rates in the country.

Unification of rates requires proper banking ties

A group of Iranian commentators over the past day have questioned the credibility of the decision as this is not the first time that the CBI announces plans to introduce a single rate.

The CBI since 2012 has repeatedly said it is going to eliminate the multi-tier exchange rate in the country but it has achieved no obvious result over the past years.

"Presence of an active international banking system for establishing banking ties with the world is among the needs for unifying the currency rate. I am not sure if the government has held talks in this regards with the international banks. However, the government is currently minimizing the use of currency [offered with the official rate] in the country’s economy," said Farhad Fozouni, a member of Tehran chamber of commerce, in an editorial published on Shorou economic daily.

Saying that a relatively stable currency market over the past four years has contributed to the gradual improvement of the business environment in the county, Jahan-e Sanaat, an Iranian economic newspaper, on Tuesday criticized the plans on the unification of currency rate suggesting the plan once materialized would worsen the economic situation in Iran.

"If the idea is fulfilled, we should witness the beginning of a dark era in the country’s economy as well as disturbance in the industry and production [sector]".

The editorial also interpreted the unification of currency rates as a decline in the value of rial against foreign currencies.

Elimination of "travel currency"

Under a previous regulation, banks were offering foreign currency with a cap of $300 to Iranian travelers at official rates that were about 5000 rials lower for each dollar compared to the open market rates.

On September 11, the CBI barred banks from supplying the subsidized dollar to Iranian travelers who plan to go abroad.

Seyedrazi Hajiaghamiri, a member of Tehran chamber of commerce, said that the decision on the elimination of the subsidized currency for Iranian travelers may cause a surge in the value of foreign currency against the Iranian rail.

"It appears that the government has decided to allow the rate of foreign currency slightly grow as the rate of dollar has increased in the Iranian market over the recent days. Of course the government is capable of preventing the surge in the [US dollar] price through pumping oil dollars but government, so far, has not made such a decision," he said.

This is while the supporters of the decision say that the elimination of travel currency would help the government get a better use of its resources in order to boost the economy as well as create new jobs.

Despite the country’s positive economic growth the unemployment rate still remains high with over three million of unemployed individuals.

Possible outcomes of unification of rates

There is about a 15 percent difference between the official and free market exchange rates of the US dollar in the current situation in Iran.

The consumers would probably show a negative reaction to the decision on the unification of exchange rates as a hike in the value of the foreign currencies as well as an increase in the inflation rate are among the possible outcomes of such measure.

On the other hand the supporters of the plan believe that the ground for the implementation of such measure has been paved as the country’s economic growth currently is in a positive area and it is experiencing stable days.

This is while a group of exporters and key players of the economy normally prefer the real rate of the foreign currency rather than the subsidized prices.

The government spokesman Mohammad Baqer Nobakht on Tuesday vowed that the administration would protect the value of national currency.

"We do not want to carry out this [unification of rates] at the expenses of the devaluation of national currency. President [Hassan Rouhani] last year did not agree to this measure. He believes that the unification of the currency rates should take place after stabilizing the market"

"Together we are POWER": ENGINET supports injured children in Ganja city (FOTO)
"Together we are POWER": ENGINET supports injured children in Ganja city (FOTO)
Azercell continues to support medical staff fighting coronavirus
Azercell continues to support medical staff fighting coronavirus
The National Institute for International Education of Korea invites international students for “2021 Global Korea Scholarship
The National Institute for International Education of Korea invites international students for “2021 Global Korea Scholarship
Loading Bars
Latest
Uzbekistan, Tajikistan agree on resumption of flights
Armenia's tries to present its position as "peaceful" - total nonsense, Azerbaijan says
Iran to offer loans to support industrial production
Isbank Georgia talks about its cooperation with IFC
Restoration of territorial integrity of Azerbaijan - undoubtedly legitimate process - Georgian expert
Adidas plans to sell ailing Reebok business within months
Cargo transportation between Uzbekistan, Afghanistan grows despite decline in int'l trade
Export of cars from Turkey to France down
Yerevan's foreign policy only possible if Armenia accepts it needs to make peace with Azerbaijan - Svante Cornell
Turkish Trade Ministry says export of domestic cars to China up
Georgia sees increase in price of medicines
Turkmenistan’s geographic location offers potential for country’s economy, says US Embassy in Turkmenistan
Azerbaijan Rabitabank’s net profit for 9M2020 revealed
National Bank of Georgia takes another steps to stabilize lari exchange rate
Procedure for calculating total amount of insurance premiums approved in Azerbaijan
Turkey's export of cars to US edge lower
Karabakh hostilities cause direct disruption to health care amid COVID-19 - WHO
Import of Turkish cars by Azerbaijan declines
Yerevan must withdraw troops, mercenaries and terrorists from Azerbaijan - Turkish Defense Minister
Azerbaijan reveals data on imports for 9M2020
Germany's nine-month import of cars from Turkey down
Apples emerging as export crop for second year in Georgia
Azerbaijan reveals 9M2020 trade turnover volumes with major partners
Nagif Hamzayev: Azerbaijan writes new pages in the world military history
Turkey's 9M2020 export of jewelry to Ukraine doubles
Azerbaijani artillerymen continue to make precise strikes at firing points of Armenian armed forces (VIDEO)
Tender: Khazar Consortium to buy materials for smooth operation of oil field facilities
Int'l organizations miscalculate military arsenal of Armenia - MP
Turkmengas opens tender for purchase of equipment
Uzbekistan’s 9M2020 export volume of fruits, vegetables revealed
MagtiCom leads with highest ARPU rate in Georgia
New apartments inagurated in Iran
Azerbaijan's overall exports for 9M2020 unveiled
Kazakhstan to increase electric vehicles manufacturing by 2022
CO2 emissions prevented in Kazakhstan as renewable energy projects launched
Revenues of mobile operators in Georgia down
Uzbekneftegaz launches condensate stabilization unit at Uzbek oil field
Azerbaijani Embassy in Russia clarifying issue on prohibiting Azerbaijani citizens to use Pobeda Airlines' services
Uzbekistan launches mineral-based engine oil production
Trend News Agency's editor-in-chief tells CNN Turk about ongoing tension in Karabakh (PHOTO/VIDEO)
Russia almost halves jewelry imports from Turkey
Azerbaijan’s AzerGold taking measures on legal assessment of illegal mining in occupied territories
Azerbaijan starts reconstructing roads leading to liberated villages of Tartar (PHOTOS)
Georgian Caucasus Auto Import adds new export markets
USAID promotes warehouse digitization of Turkmen logistics company
Uzbekistan eyes to increase cars export by 4Q2020
Uzbekistan’s private business actively involved in agriculture digitalization
Sanctions must be imposed on Armenia, says Lebanese legal expert
Attacking civilians unacceptable, Israeli ambassador says
Armenia opens additional flights to transfer volunteers to Karabakh (PHOTO)
Number of people infected with COVID-19 pandemic in Iran exceeds 550,000
Azerbaijan's president says Armenia receiving external help, including mercenaries, weaponry
Your statements every evening about how many villages, cities have been liberated from occupation bring joy to people all over Turkey - Turkish Chief Ombudsman
Azerbaijan confirms 171 more COVID-19 recoveries
Turkmenistan's import of Turkish jewelry surges
Value of Azerbaijan's goods export by road edges down
Those unwilling to fight in Armenia buy positive coronavirus test at $1,000-2,000
There is not single surviving building in liberated cities, in these villages, in most of them - Azerbaijani president
Media of many countries unilaterally side with Armenia - President Aliyev
Israel's ambassador to Azerbaijan visits Ganja, witnesses damages following Armenia's attack (PHOTO)
We have never taken and will never take any action against civilians, says Azerbaijani president
By breaking back of Armenian fascism, we save our region from great tragedies - President Aliyev
Iran’s Bahar Azadi gold coin price rebounds
Georgia, Japan sign double taxation avoidance agreement
Volume of investments to be made to Iran's Khuzestan Province growing
Auto sales drop on Georgian market
Gasoline demand to decline from 2030
Volume of cargo freight via Azerbaijani ports continues to grow
Turkmenistan forecasts total revenues, expenditures of country's financial plan for 2021
EBRD supports refurbishment of wastewater facilities in Kazakhstan's Shymkent
COVID-19 may accelerate downward trends in oil consumption of developed economies
Uzbekistan boosts jewelry import from Turkey
Azerbaijani Central Bank unveils amount of foreign currency sold to local banks
Oil demand has yet to peak for two key reasons
Karabakh conflict should be settled on issues of boundary lines, sovereignty issues - US Ambassador to NATO
Armenians fire at Azerbaijan’s Gabala and Kurdamir cities by using Elbrus ballistic missiles (PHOTO)
Azerbaijan-Russia strategic partnership to reach high level
'NATO not part of Karabakh conflict', Stoltenberg tells Armenia
Azerbaijan shows video footage of captured military equipment of Armenian Armed Forces (VIDEO)
Gold, silver prices in Azerbaijan down
Armenian servicemen refusing to fight, says Azerbaijani MoD
National Bank of Georgia talks about 3 key challenges in financial sector
Armenia must leave occupied Azerbaijani lands, says Turkish president's aide
Uzbekistan to increase electricity supply to Afghanistan
Civilian wounded from Armenian Armed Forces' missile attack on Azerbaijan's Gabala
Turkmenistan to take measures to increase volume of domestic production
Russian businessmen intend to expand their activities in Azerbaijan
Georgia's gov't places funds on term deposits at commercial banks
Turkish export of jewelry to Kyrgyzstan decreases
Gold producing plant to introduce environment preserving technology in Kazakhstan's Zhambyl
Pashinyan's Facebook post on "shortcut to victory" ridiculed by Arab readers (PHOTOS)
Mineral reserves of deoccupied Azerbaijani territories will be recalculated - MENR
Deeper recession averted in Azerbaijan, says CBA chairman
Uzbekistan, India in talks over bilateral co-op in healthcare sphere
Pashinyan's statement on absence of diplomatic settlement for Karabakh conflict reveals Armenia's intentions
Azerbaijan's exports to Russia climbs
Turkmenistan plans to attract investment for lending to industries
Kazakhstan’s oil producing company opens tender to buy spares
Kazakhstan's coal extracting venture to buy pumps via tender
Uzbekistan's foreign trade turnover decrease for 9M2020
All news