Would Rouhani administration support higher currency rates?

Business Materials 7 February 2018 21:39 (UTC +04:00)

Tehran, Iran, Feb. 6

By Kamyar Eghbalnejad – Trend:

Although Iranian President Hassan Rouhani has dismissed the allegations accusing the government of intentionally pushing up the rate of foreign currencies against the national currency, rial, a Tehran-based economist still believes that the government supports the surging rates.

“Nowadays, the government is dealing with a deficit in the budget because it has failed to collect the total projected tax income. On the other hand the government did not achieve its goal of increasing fuel prices. In this condition, the administration has to increase the rate of foreign currencies,” Ehsan Soltani, a university lecturer and an economic researcher, has told Trend.

The US dollar over the current fiscal year (started March 20, 2017) has surged against the Iranian national currency by at least 25 percent, posting 46,864 on Tuesday. The rate of euro has also jumped by 45 percent to stand at 58,937 rials on the same day.

However, President Rouhani at a Tuesday press conference denied that the government is suffering from the budget deficit.

Iranian government’s total revenues stood at 840.4 trillion rials (some $23 billion based on official rate of 36,600 rials per each USD) during first eight months of the current fiscal year (March 20-Nov. 21).

Meanwhile, over 1,173.4 trillion rials of revenues were envisaged in the national budget for the mentioned period, which means that the government revenues were materialized by 71.6 percent, based on latest data released by Central Bank of Iran (CBI).

Total revenues of the Iranian government registered a rise by 7 percent during the eight-month period, year-on-year.

Ehsan Soltani further forecasted that the hiking currency rates may lead to a price rise in other markets and goods which would eventually push up housing prices.

“The surge in the prices of housing units would increase the total costs of households and this would worsen recession in the country,” he added.

The expert turned down the idea that a surge in the currency rates would contribute to the non-oil exports, adding that this would definitely plunge the economy into recession.

Ehsan Soltani suggested that the government is very likely to adopt policies aimed at tackling the growing rates.

President Rouhani alongside with his Finance Minister Masoud Karbasian have advised their fellow people to refrain from purchasing foreign currencies in order to protect their assets.

Karbasian on Tuesday pledged that the rate of the foreign currencies would definitely go down in near future and this would work against those who invested in the currency market.

The spokesman for the judiciary, Gholamhossein Mohseni Ejehi, on Feb. 4 announced that security officials had brought at least six individuals to prosecution over the recent fluctuations in the currency rate.