Iranian Lawmaker Says Forex Rates Should Be of Descending Order

EghtesadOnline: Following the recent decline in foreign currency rates, the price of goods which leaped (thanks to earlier exchange rate rises) over the past several months is expected to fall again, says Mohammad-Reza Pour-Ebrahimi, the chairman of Majlis Economic Affairs Commission.

News ID: ۷۴۶۲۷۳

01 December 2018

He said the current foreign exchange rate is still far from real and should remain on the descending order, hoping that the downward spiral would continue in the coming months until the market reaches stability.

"It should be said that markets resist such price drops and therefore the  Industries, Mining, and Trade Ministry, Consumer and Producer Protection Organization, and other regulatory bodies should step in or the Parliament will intervene", he said.

Recalling that forex rates in the domestic economy are influenced by both economic and non-economic factors,  the MP emphasized that non-economic factors were more influential in the "artificial increase in forex prices" – a byproduct of the US exit from the Iran nuclear deal and re-imposition of sanctions on November 4, Financial Tribune reported.

A banking and monetary said that  that a unified exchange rate will not be efficient in current the economic climate and the central bank is expected to keep intervening in fixing  the currency rates.

Hamid Zamanzadeh noted that besides implementing other monetary and banking policies, adopting measures to stabilize the currency market is on the CBI and government agenda.

"The CBI has set a goal for the exchange rate and meaningful efforts should be made toward fulfilling this goal", Zamanzadeh told state TV,

He added that the official exchange rates declared by CBI are to facilitate import/export needs and the import sector hardly has the capacity for higher rates. At the same time, he said, lowering the market exchange rate and bringing it closer to the secondary market (Nima) will increase speculative demand and capital flight.

He believes that curbing capital flight and speculative demand will help narrow the gap between different exchange rates, thus, CBI is rightly expected to continue intervening to keep exchange rates stable.  "CBI has the final say and the authority it needs," said Zamanzadeh.

Back in September, a top government body, headed by President Hassan Rouhani and the heads of parliament and the judiciary, gave the central bank governor the  authority to intervene in the foreign exchange market and manage it.