TEHRAN, Iran, Dec. 21
Trend:
Iranian Minister of Industry called the dual foreign exchange rate the root of the country's economic problems and asked the parliament to make "a revolutionary decision" to eliminate the foreign exchange at the official rate (42,000 rials per dollar).
"The decision-making system in the Ministry of Industry is based on the three axes of government, parliament and the private sector, and we always use the views of the private sector for decision-making," the Minister of Industry, Mine and Trade Alireza Ram Hosseini said, Trend reports citing Mehr News Agency.
He also described entrepreneurs and producers as "economic warriors" during the sanctions era.
Razm Hosseini said that the root of many of the country's economic problems is the dual exchange rate and asked the members of the Iranian Parliament to make a revolutionary decision to eliminate the foreign currency at the official rate.
"The Ministry of Industry, Mines, and Trade, as a representative of producers and economic activists, has persistently sought to unify the currency rate and eliminate the foreign exchange at the official rate," he said.
Iran’s current currency policy was April 2018 in the aftermath of a devaluation crisis that had formed in anticipation of the re-imposition of U.S. secondary sanctions as Donald Trump moved closer to his decision to withdraw from the JCPOA nuclear deal in May 2018. Subsequent rounds of sanctions and particularly restrictions on Iran’s oil exports have added further pressure to Iran’s currency markets.
Iranian policymakers responded to these pressures and the fast-rising cost of imported goods with a policy that plays into Iran’s multiple exchange rates and entails allocating foreign currencies to importers of essential goods at the official rate of 42,000 rials per USD—a far lower rate than the current open market rate of around 260,000 rials per USD.
The government operates a third rate, the NIMA rate, which is named for the online currency system that was established by the Central Bank of Iran (CBI) also in April 2018. The system is made available to exchange houses and banks that buy foreign currency and is where exporters are obligated to repatriate their export yields.