Call to Incentivize Compliant Exporters

EghtesadOnline: Governor of the Central Bank of Iran Abdolnasser Hemmati has called on President Hassan Rouhani to incentivize exporters who have fulfilled their commitment to repatriate their overseas revenues.

News ID: ۷۵۰۵۴۳

27 July 2020

In a letter to the president Sunday, Hemmati listed the names of 108 export firms, including 36 petrochemical companies, 24  steel and mineral companies and 48 individuals asking the president to appreciate their efforts.

According to the CBI, the companies and individuals collectively repatriated an estimated $24 billion of their revenue in the past two years.

The CBI recently announced that exporters have failed to repatriate export earnings to the tune of $27.5 billion in the past two years.

Earlier in the month, the bank announced ways and means for repatriating export earnings in the current fiscal year that ends in March 2021 plus the earnings of the past two years.

Provisions in the package stipulate that exporters who default will be barred from doing business and possibly be prosecuted.

Among other things, the procedures say all exporters need to  bring back at least 80% of their earnings in “foreign exchange hawala” and maximum 20% in hard currency.

The proceeds must be sold via the secondary foreign exchange market (known by its Persian acronym Nima) to banks and authorized exchange bureaus.

Manufacturers who export are allowed to use maximum 30% of the overseas earnings for their import needs but should sell the balance in forex hawala in the secondary market.

Drawing parallels between the past and present rules, it appears that the CBI has made its procedures more stringent and tightened restrictions for exporters.

Forex, Gold Coin Rates

The dollar and euro remained almost unchanged in Tehran’s market on Sunday. Gold coin prices, however, increased to end the day 2-3% higher.

The greenback was quoted at 229,500 rials in the open market, slightly lower than the previous day's close. One euro fetched 267,500 rials not much change compared to Saturday's close.

In the secondary market one dollar was traded at 179,080 rials, down 2.5% compared to Saturday. The euro also was lower  1.7% to be quoted at 208,715 rials.

The Emami gold coin price increased by 2.8%, or 3 million rials, to reach 108 million rials. Bahar Azadi gold coin also registered  3.29% increase on Sunday and ended the day at 100.2 million rials.

Foreign currency rates shot up against the rial since the early weeks of new Iranian calendar year (March 2020), reportedly after the coronavirus pandemic halted trade between Iran and neighboring countries and adversely affected forex supply.

The pandemic by extension caused many exporters to delay selling their export revenue to the Nima market, the main currency platform through which exporters sell their overseas earnings and importers buy.