Iran Oil Export Revenues Will Help Buttress Forex Supply: CB Chief

EghtesadOnline: Governor of the Central Bank of Iran said at the weekend Japan has resumed importing Iranian oil after China, South Korea, India and Turkey.

News ID: ۷۴۶۵۳۶

22 January 2019

Abolnaser Hemmati used Instagram to assure the public that new oil revenues, backed by "billions of dollars in existing CBI resources with foreign banks," would soon enter the country's trade cycle.

A spokesman for a Japanese refinery confirmed to Reuters on Monday that refiners in that country loaded Iranian oil onto a tanker, resuming imports after halting purchases because of the new US sanctions against Tehran.

Japan is last of the four biggest Iranian oil buyers in Asia to resume imports after receiving a waiver from US sanctions on crude imports that started in November, Financial Tribune reported.

China and India maintained their imports after November while South Korea halted imports for four months, resuming them over the weekend. Iran is the fourth-largest oil producer among the members of the Organization of the Petroleum Exporting Countries.

Hemmati referred to non-oil exports, saying that with new agreements between the CBI and exporters, proceeds from non-oil exports "will gradually be available for imports."

He did not provide details about the agreements, but exporters have been complaining, ever since the currency repatriation rules took effect last year, about the three-month deadline and the fact that they cannot use their own forex earnings for their import needs.

Nima Unwanted

In addition to the usual red tape and deluge of directives that targeted businesses since last April when the government, in desperation, unified the US dollar rate at 42,000 rials, exporters have called for suspending the Nima – an integrated forex deal system where as per law all currency deals must be conducted.

For instance, exporters cannot use their own currency to import their own raw material needs. This is because raw materials are considered 'priority two' and since the system should not be violated, export earnings (mostly considered 'priority 3' in that they are finished or consumer products) cannot be used for the import of raw materials by exporters themselves or by other importers.

Hemmati reiterated that the CBI's hard currency reserves (banknotes) are sufficient to meet all the "real needs" of the people.

Noting that some vested interests are trying to undermine the forex market, the senior banker said,  "It is interesting that as middlemen manipulate forex  rates in virtual space, demand in money exchange shops remains weak."

Balancing Demand?

Without providing details, he added, "These days the CBI should also take care of the demand side" for hard currency.

Iran’s oil exports declined sharply after US President Donald Trump in May 2018 pulled out of the Iran nuclear deal and re-imposed sanctions on Tehran.

Minister of Industries, Mining and Trade on Sunday announced some limited measures to ease conditions for exporters, including the extension of the registration time for imports from three months to six months and import of certain goods without the usual formalities of "currency transfer."

The extension of the registration period had for long been demanded by importers on the grounds that the short deadline at times led to the expiration of their orders and resumption of the cumbersome and complex re-registration process.

Farshad Moghimi, deputy industries minister said on Monday that the import of raw materials, spare parts and essential goods for production units can be processed without currency transfer up to $300 million until March 20.

This measure allows importers to bring in their urgent needs using their own resources or currency bought from the free market, eliminating the long wait at Nima.