Central Bank of Iran Sees Signs of Economic Stability

EghtesadOnline: Governor of the Central Bank of Iran says people are more optimistic now about the improving economic conditions than they were six months ago.

News ID: ۷۴۸۲۵۸

26 August 2019

Referring to efforts to enhance domestic production and given the positive signals from markets, Abdolnasser Hemmati took to Instagram at the weekend to say that he sees signs of economic improvement.

Hemmati said the relative stability in the currency market has had an impact on other markets, Financial Tribune reported.

“On several occasions in the past three months, I have reiterated that stability in different markets and decline in inflation means that the economy is moving toward stability,” he wrote.

Referring to hard facts during a state TV program last week, he said the economy is showing signs of improvement in key variables.

More specifically, he pointed to the rial regaining 40% of its lost value in the face of new US sanctions and decline in the pace of price hikes.

According to the Statistical Center of Iran, consumer prices registered a year-on-year increase of 41.6% in the Iranian month ending August 22 compared to the similar month last year.

This is while the figure was 52% in April.

In addition, monthly inflation indicated a 0.6% rise during the reviewed month, the lowest since the beginning of the last fiscal year (March 2018).

Low-Income Strata

Regarding the economic plight of low and middle income groups, Hemmati stressed that the relative stability in currency markets doesn’t mean that pressure on vulnerable groups has eased.

“Stability in the markets indicates failure of the so-called ‘maximum pressure’ campaign unleashed by the United States government. But this does not mean decline in prices or easing of pressure on the people.”

To mitigate the detrimental effects of US sanctions, Hemmati said that the government is steadfast in supporting the low and fixed-income strata.

The US re-sanctioned Iran after unilaterally withdrawing from the 2015 historic nuclear deal Iran signed with the six world powers and has said it wants to reduce “Iran’s oil exports to zero.”

Donald Trump launched his maximum pressure campaign to force Tehran to return to the negotiating table for a new deal that would include new areas of US concern, including Tehran’s missile program and regional policy.

The hostile US administration said in May that it would no longer renew sanction waivers that allowed China, India, Japan, Turkey and South Korea to continue importing some Iranian oil.

Incentivizing Domestic Manufactures

Iran has launched efforts to fend off the mounting US pressure, resorting to a variety of measures, including incentives to manufactures and exporters to boost production and foreign currency revenue, increase non-oil revenue and start barter trade with regional and non-regional states to evade the  US economic and banking restrictions.

The CBI chief spoke of the gradual efforts by US allies to distance themselves from the controversial Trump White House as another indication of the failures of US maximum pressure policy against Iran.

He was alluding to unconfirmed reports about a change in UAE's position regarding Iran.

News outlets reported in July that officials from the UAE coastguard met their counterparts in Tehran to discuss border security, illegal crossings, fishing rights and shipping in the strategic Strait of Hormuz.

Earlier in August, the UAE minister of state for foreign affairs, Anwar Gargash said the emirate and its ally Saudi Arabia prefer a political approach to their problems with Iran.

Hemmati spoke of concerted government efforts to boost revenues from oil and oil export “through various methods.” He did not elaborate.

Deputy Oil Minister Amir Hussein Zamaninia said earlier in May that Iran has found “a grey market” for its oil.

“We certainly are not selling 2.5 million barrels per day as mentioned under the nuclear deal. But we have found a grey market,” Zamaninia said without providing details.