Majlis Tentatively Backs Gov’t Forex Measures

EghtesadOnline: The Majlis Economic Commission said on Tuesday that it fundamentally agrees with the government's recent measures to control the foreign exchange market, although some of the executive decisions should be reconsidered.

News ID: ۷۸۲۳۷۰

18 April 2018

"The government's measures for organizing the foreign exchange market are approved as a whole because the market has not been left to its own devices, but some executive decisions should be reconsidered," Mohammad Reza Pour-Ebrahimi, the commission's chairman, was quoted as saying by ICANA during his meeting with Economy Minister Masoud Karbasian.

The government announced late Monday that it would enforce a single exchange rate to the dollar, banning all unregulated trading after the rial hit an all-time low, Financial Tribune reported.

In what was regarded as drastic measures, the government also set the official rate at 42,000 rials to the dollar as of Tuesday. First Vice President Es'haq Jahangiri said trading at any other price was forbidden and would be considered "smuggling."

The decision came after a two-day hike in prices of foreign currencies that saw the rial trading at 62,000 to the dollar.

CBI Governor Valiollah Seif later said the rate was not fixed and would swing in line with inflation and other market mechanisms.

Pour-Ebrahimi at the time expressed his strong dissatisfaction at the new measures, saying that a "fixed" exchange rate would have adverse consequences for the country.

"At a time when market prices are higher, the government should have started with a more real rate and then moved toward lower rates, not the other way around," he said.

He also backed a motion to establish a currency futures market and foreign currency accounts at banks for people to deposit their forex holdings instead of stashing them away.

The lawmaker called for more concrete measures to establish a forex market, prodding the government to prevent capital outflows.

Pour-Ebrahimi announced that early next week, his commission will hold another meeting with government representatives on the forex market, adding that the commission's final report might be read in an open session, if it is geenlighted by the presiding board.

The rial's slide, which accelerated from the early days of the current Iranian year (started March 21), caused concern among the public and the business community. The crisis, the worst in five years, was also a blow to the administration of President Hassan Rouhani, which had made forex market stability a tenor of its campaign promises.

Explaining the situation to lawmakers on Tuesday, Seif said fluctuations in the currency market had no economic justification.