Auto Parts Association of Iran rings alarm over currency fluctuations

Business Materials 7 February 2018 17:23 (UTC +04:00)

Tehran, Iran, Feb. 7

By Kamyar Eghbalnejad – Trend:

A senior Iranian auto-parts maker has warned against the negative impacts of currency fluctuation on the country’s automotive industry, urging the government to adopt policies on the unification of the currency rates.

“I assume the surging currency rates will lead to a hike in the prices of spare parts and eventually the prices of cars,” Mohammad Reza Najafi-Manesh, the secretary of Auto Parts Association of Iran, told Trend.

“Nowadays many car part manufacturers are operating at losses because the costs of production have surged but the car manufacturers are purchasing the spare parts at the previous prices. The carmakers blame the low price of car parts on the government refusal to increase the prices of vehicles,” he added.

The US dollar over the current fiscal year (started March 20, 2017) has surged against the Iranian national currency by about 25 percent, posting 46,617 on Wednesday. The rate of euro has also jumped by 45 percent to stand at 58,206 rials on the same day.

“On the other hand, the lower currency prices would speed up imports of spare parts which is against the interest of producers. Therefore the policymakers now have to consider both situations, imports versus domestic production,” he added.

He further urged the government to unify the currency rates and stabilize the currency rates at somewhere between 45,000 rials and 50,000 rials.

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 results, so far.

The gap between the official and free market rates of the US dollar against the Iranian rial on February 7 was about 26 percent.