Iran's Regulated Forex Market a Step in the Right Direction

EghtesadOnline: A former governor of the Central Bank of Iran says the regulated foreign exchange market would be a significant step by the CBI toward a single rate currency.

News ID: ۷۴۸۲۱۷

19 August 2019

Welcoming the positive aspect of the market, Tahmaseb Mazaheri commended the “brave and serious” central bank’s measure in rewriting the long-awaited currency policy.

“Launching the regulated market is the second loop in the chain of unifying forex rates after correcting currency prices,” he told a radio program, Fars News Agency reported.

Currency is traded at three separate rates in Iran, namely the official subsidized rate, secondary market rate and open market rate, Financial Tribune reported.

A dollar at official rate is worth 42,000 rials. It is allocated for very selected food items.

The secondary market is the venue where exporters offer their overseas earnings via a platform called Integrated Forex Deals System, known by its Persian acronym Nima.

Due to foreign currency shortage, the government has sharply limited the allocation of subsidized currency for importing essential goods.

“Presently, very few people have access to the 42,000-rial per dollar from the CBI,” Mazaheri said, implying that government is gradually moving towards scraping the cheap currency.

The veteran banker pointed to CBI moves to draw the forex rate in Nima and open market closer – a permanent demand of the businesses community and free market advocates.

Each USD changed hands for 117,000 rials in Tehran on Sunday. The rate was as high as 140,000 rials to the greenback barely four month ago.

At Nima the US currency is exchanged for a little less than 120,000 rials.

The much-publicized regulated currency market seeks to create and organize an open and transparent system where foreign currency will be traded in cash via an electronic platform.