Central Bank of Iran Governor Expects Additional Forex Allocation for Imports

EghtesadOnline: The central bank governor said volume of foreign currency trade in the secondary market amounted to €7.3 billion in the past two months. Abdolnaser Hemmati predicted that this amount would accelerate because the government has bestowed more power on the Central Bank of Iran to offer forex from petrochemical exports and other non-oil exporters in the secondary market, the regulator reported on its website on Saturday.

News ID: ۷۴۶۱۲۹

21 October 2018

Secondary market deals are made through the Forex Deals Integrated System, an online system locally known by its acronym Nima.  Through the system importers declare their currency needs and exporters offer their foreign currency earnings while banks and exchange bureaus act as intermediaries.

Iran Trade

Since the beginning of the current fiscal in March, more than $27 billion was allocated for imports of 25 basic and necessity goods by the CBI and $9.5 billion through was sold through Nima. Hemmati said under the prevailing economic conditions identifying and prioritizing the “genuine” import needs are crucial to which the Ministry of Industries, Mining, and Trade along with other relevant ministries must pay close attention.

In his belief, not offering rial earnings gained from exports to Iraq and Afghanistan is unacceptable and stressed that rial exports too should return to the cycle of country’s economy, Financial Tribune reported.

The Central Bank of Iran requires all exporters to repatriate their currency earnings within three months or use them to import new goods. Exporters object that the three-month deadline is not enough and that it should not include earnings disbursed in local currency.

Trade balance showed a $940 million surplus during the first half of the current fiscal (March 21-September 22). Exports totaled $23 billion to register 13% increase compared to last year’s corresponding period, while imports saw a $3-billion decline to $22.1 billion, the head of Iran Export Confederation Mohammad Lahooti told a press briefing on Saturday.

Lahooti said China, Iraq, the UAE, and Afghanistan were the top five export destinations during the six-month period, IBENA reported.

Less than $7 billion was injected into Nima during the sex months, he said.

Iran’s exports to Europe have declined noticeably in H1.  He put exports to Germany at $134 million.

Lahooti said the value of registered import orders was €56.5 billion during the period under review; however the figure does not reflect the real imports or currency allocation but that demand for import has been increasing, twice higher compared to the same period last year.

Referring to the return of earnings from exports to Iraq and Afghanistan, he said Iran does not have direct relations with Iraqi and Afghan banks. Iraqi companies importing from Iran pay exchange houses in Iraq in dinar while  Iranian exporters receive their bills in rial. This is while national currencies have no place in Nima and Iran exporters are not interested in being paid in dinar.

He noted that the CBI should first announce the names of authorized exchange shops in Iraq.

Iran’s annual exports to Iraq and Afghanistan surpass $10 billion and the two neighbors are among Iran’s top export targets. Negligence could lead to losing these lucrative markets and Iranian companies being replaced by Turkish firms, Lahooti warned.