Iran's CB: Forex Allocation After Rate Unification at $6.6b

EghtesadOnline: The Central l Bank of Iran has announced allocating $6.6 billion to fulfill the country' foreign exchange needs between April 11 and May 8 at the unified rate of 42,000 rials.

News ID: ۷۸۲۵۴۲

12 May 2018

CBI said in a statement published on its website that of this amount, $5.46 billion have been allocated through banks from central bank resources, $700 million through Integrated Foreign Currency System (locally known as Nima) for the import of goods and services, and $445 million belonged to individuals that have used their export earnings for import purposes.

The government decided to unify the dollar's exchange rate at 42,000 rials on April 9 in the wake of a sharp slide in the value of rial.

According to the measures, the US dollar for all purposes, including imports, travel, overseas students and research projects, will be offered by the government at the exchange rate of 42,000 rials, Financial Tribune reported.

The announcement was later followed by other measures approved by the Cabinet and subsequently notified by CBI.

The central bank launched Nima to track all forex transactions involving banks, exchange houses, importers and exporters in real time.

CBI Governor Valiollah Seif later said that at the core of recent decisions taken by the government regarding the foreign exchange market has been the immunization of the economy from "enemies' propaganda", particularly those coming out of the US.

The statement comes two days after US President Donald Trump announced that the United States was pulling out of the Iran nuclear deal and reimposing sanctions that were in place before the 2015 agreement.

Starting Aug. 7, the US will also impose sanctions on the purchase or acquisition of US dollar banknotes by Iran’s government, the US Treasury Department has said.

The Joint Comprehensive Plan of Action (the formal name of the nuclear deal) curbed Iran's nuclear activities in return for the lifting of sanctions that had been imposed by the UN, the US and the European Union.

CBI added that of the total foreign exchange allocations, $3.75 billion have been delivered by banks to the applicants.

Of the allocated hard currency, about $1.1 billion were allocated for the import of basic goods such as rice, barely, legumes, livestock, corn, oil, sugar and meat, among others. An equivalent of $330 million was also used to import medical equipment and medicines.

Unshaken

In the days following the US move to exit the multilateral nuclear deal, Iranian officials have emphasized that the foreign exchange situation will help the country overcome any challenges.

At a conference on Wednesday, Valiollah Seif reiterated that the country's forex resources and expenditures are well-balanced and that the US move should cause no worries.

Seif also promised that his bank is working to address the shortcomings of the current forex measures, which would certainly be removed in the future.

Economy Minister Massoud Karbasian also said Trump's decision could not disturb the country's economy.

"Business owners should not have any concerns about the country's economic circumstances because as a result of the measure taken, an atmosphere has been created that external factors cannot shake," Karbasian was quoted as saying by IBENA.

The day after Trump announced his long-awaited decision to withdraw from the 2015 Iran nuclear deal, EU members were hammering out measures to protect European firms doing business in Iran from US sanctions.

Washington has given companies between 90 and 180 days to phase out existing contracts with Iran and banned them from signing any new ones, under the threat of sanctions.