Businesses Told to Buy Foreign Currency From Banks

EghtesadOnline: The Central Bank of Iran, in a statement on Saturday, informed businesses to approach the banking system for purchasing foreign exchange.

News ID: ۷۷۲۶۱۳

25 December 2016

“Back in July, the banking system was authorized to trade in foreign currencies at the open market rate and lenders are currently prepared to meet the foreign exchange needs of businesses,” reads the statement published on CBI's website.

The statement comes in the wake of the recent US dollar rally in Tehran market, which the CBI insists is mostly fueled by market speculations, the website of the Association of Bureaux de Change Operators of Iran said.

The US dollar broke the 40,000-rial threshold in Tehran's market on Wednesday, recording an all-time high. It was sold for 40,200 rials at the close of trade on Wednesday

The greenback changed hands at 40,500 rials late Saturday.

The central bank has also announced that the forex rally is transitory  and will be over by the end of the current fiscal year (March 20), rejecting claims that the government is in favor of increasing forex rates to make up for its budget deficit.

CBI also expects an immediate drop in the US dollar's exchange rate after the New Year’s Eve.

According to the statement, the central bank will provide the banking system with hard currency to meet the importers’ need.

CBI will also continue to offer foreign currencies at the official subsidized rates, a move condemned by the private-sector activists as harming production and giving rise to rent-seeking, Financial Tribune reported.

Back in July, CBI allowed commercial banks for the first time to trade in the parallel foreign exchange market, as part of the initiative to scrap the dual exchange rates and move toward a floating currency regime.

According to the CBI statement, banks in recent weeks have been authorized to offer more services in foreign currencies.