Central Bank of Iran: €2.2 Billion Sold Via Nima

Nima is a platform where exporters sell currency earnings at prices lower than open market rates and companies buy it for importing machinery, equipment and raw material. 

 The currency on includes CBI contribution to the system plus the repatriated currency earnings from non-oil exports. 

Each Euro was sold for 110,000 rials on Nima on Saturday, according to Financial Tribune.

The Nima currency is sold to importers of goods categorized by the government as non-essential. Government allocates subsidized rates (1USD=42000 rials) for importing essential goods. 

Lower Nima rates compared to the open market has tempted exporters not to repatriate their earnings to the CBI-controlled system. 

According to earlier reports, companies barely offered one-third of their earnings during the previous fiscal (March 2018-19) on Nima --  a development the CBI and senior government officials have often criticized and warned those dodging the stringent currency rules, especially during the present difficult times. 

The CBI governor said Friday as part of measures to shield the economy against new US sanctions, the regulator aims to improve the efficiency of the Nima system. 

The United States ended the sanction waivers it had granted to Iranian oil importers last year in the latest and officially acknowledged attempt to harm Iran’s economy and reduce its “oil exports to zero.” 

The CBI chief stressed the need to improve non-oil exports and encourage exporters to bring back export earnings. 

CBI tried to convince traders to return their currency earnings and offered an incentive package in February involving repatriation exemptions for earnings up to a specified ceiling. It also said those who fail to comply would face prosecution. 

€2 for Essential Goods 

CBI has allocated another €2 billion for importing essential goods and pharmaceuticals. It emphasized that the CBI would “make every effort to provide foreign currency for real needs.” 

Hemmati said Friday that the bank is aware of the need to supply currency for importing essential goods to help protect the vulnerable strata. 

Following the unprecedented hikes in foreign exchange rates since last spring, the government implemented the subsidized currency policy to keep prices of essential goods in check and support those at the lower end of the economic ladder. 

Allocation of subsidized currency for importing essential goods was a topic of heated debate in the parliament following mounting criticism that the policy is in the interest of rent-seekers and avaricious middlemen, not  the vulnerable and less-privileged. 

Government negligence in implementing market regulations is seen as the main reason behind the failure and inefficiency of subsidy policies.

MPs approved an amendment to the 2019-20 budget obliging the government to allocate $14 billion from oil export revenue for importing essential goods.

Accordingly, the government is required to allocate currency for such goods either at subsidized rates or Nima rates. In the case of the latter, the difference in Nima and subsidized rates should be paid either in electronic coupon or directly in cash to the people.