Iran Banks Allowed to Purchase Foreigners’ Hard Currency

EghtesadOnline: The Central Bank of Iran has allowed lenders to purchase the hard currency held by foreign tourists, transit drivers, foreign diplomatic missions based in Iran and representative offices of foreign banks.

News ID: ۷۸۲۵۵۳

13 May 2018

In a statement published on CBI's website on Saturday, the bank said these entities can sell their currency to banks at the rate announced by the central bank through a written request. The bank adds that the purchases would have to be approved by the Organization for Investment, Economic and Technical Assistance of Iran.

CBI said that this is in line with giving banks the main "intermediary role in managing foreign exchange resources" and guiding those resources to those who need them.

The decision would further sideline exchange houses in the wake of restrictions that followed forex rate unification on April 9. Exchangers had played an important role during the past sanctions in conducting forex transactions because of tough embargo on banks, according to Financial Tribune.

The government decided to unify the dollar's exchange rate at 42,000 rials 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.

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

The central bank launched the Forex Deals Integrated System (locally known by the acronym Nima) to track all forex transactions involving banks, exchange houses, importers and exporters.

CBI Governor Valiollah Seif later said recent forex decisions taken by the government have been aimed at immunizing the economy from "enemies' propaganda", particularly those coming out of the US.

The latest statement also comes 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 imposed by the UN, the US and the European Union.

Other Measures

Fars News Agency also revealed on Saturday that the Foreign Ministry is negotiating with embassies in Tehran for visa applicants to pay their fees in rial rather than a foreign currency.

The new forex regulations have made it difficult for applicants to obtain foreign currency for purposes not defined in CBI's directives and hence the ongoing negotiations with embassies.

Under the procedures, visa applicants would be able to pay their fees through a POS device in the local currency and the embassies would be reimbursed by Saman Bank in foreign exchange.

Mohammad Reza Pour-Ebrahimi, the chairman of Majlis Economic Commission and a vocal critic of the government's forex policy, said the parliament has held off its decision to introduce a double-urgency bill for stabilizing the forex market.

Pour-Ebrahimi was quoted as saying by Tasnim News Agency that since meetings between lawmakers and First Vice President Es'haq Jahangiri are underway, the parliamentary motion would roll only if they fail to achieve understanding.