Iran Currency Market: Rial Firms as Forex Power Diminishes

EghtesadOnline: F oreign exchange rates are of the declining order in the final days of November thanks to a stronger presence of the Central Bank of Iran in the market and optimism that Iran will continue to sell its oil despite earlier speculations.

News ID: ۷۴۶۲۶۹

26 November 2018

On Saturday the US dollar was traded for 125,000 rials, down from 126,500 rials on Thursday. The rial has pared some of its losses in recent weeks, with the USD exchange rate dropping by 15% in less than two weeks.

CBI boss Adbdolnasser Hemmati in an interview with state TV Thursday said the stability in the foreign exchange market will continue and warned the people against buying foreign currency.

"We have special means to stabilize the market but cannot announce the details of such measures," Financial Tribune quoted Hemmati as saying.

The official quoted President Hassan Rouhani who earlier had said that the country has "its largest reserves of [foreign currency] banknotes" since they predicted the move by US President Donald Trump to withdraw from the 2015 Iran nuclear deal.

The Trump administration imposed a new round of sanctions on Iran on November 5 aimed at zeroing oil and gas exports and said these sanctions would be the toughest yet on Iran. Secretary of State Mike Pompeo announced that eight countries would be exempt from Iran’s sanctions for six months.

Hemmati responded to criticism at the new currency repatriation rules announced by the CBI, which have drawn protestations from exporters, saying that the CBI could backtrack on its stance that all export earnings should return to the national economic cycle.

Hemmati, however, complained that exporters have not been honest in repatriating their currency earnings to the secondary market's Nima system, but said based on the new rules €5 billion should enter the open market by yearend in March.

The central bank communicated details of the latest currency repatriation rules this week according to which earnings of up to €1 million are exempt from selling  through Nima – the Integrated Forex Deals System launched by the government after it unified the USD rate.