Rial Pares Losses on Central Bank Moves

EghtesadOnline: Iran’s rial recouped some of its losses after hitting a record low against the US dollar on Thursday on the open market, according to reports, as the economy continues to face pressure from the reimposition of US sanctions.

News ID: ۷۸۳۹۳۷

10 September 2018

The dollar was being offered at 140,000 rials on Wednesday and had hit the record low of 150,000 rials earlier in the week– a figure considered by many to be a "super-resistance level".

However, on Thursday, the Iranian currency pared some of its losses and was quoted at about 138,000 to the dollar. Rial's gain continued on Friday, a day on which official markets are closed, with the dollar being traded at around 133,000 rials.

The reason for the correction in prices was traced to a series of positive measures by the Central Bank of Iran. On Friday, CBI's Public Relations Office cited export revenues, announcing that between Aug. 7-Sept. 6, hard currency from exports reached €1.82 billion. It added that the bank allocated €1.8 billion for imports during the same period, Financial Tribune reported.

CBI also notified a directive to certified exchange bureaux on Wednesday, allowing them to import currency from their own resources and also purchase the currency offered by exporters through Nima.

It said that moneychangers could then sell the currency at market rates to buyers "as per the CBI regulation".

The directive is aimed at easing forex controls and injecting more currency into the market.

As per an earlier directive by the bank, 23 needs have been identified, for which applicants can go to exchange shops and buy foreign currency.

On the website Sana, which records the average exchange rate of exchange bureaux, the dollar's exchange rate was 130,819 rials. The euro fetched 157,300 rials, according to Tehran Gold and Jewelry Union's Website.

According to the same website, the gold coin also dropped on Thursday. The benchmark Bahar Azadi changed hands at 44 million rials ($336) after having crossed the 4- million-rial threshold earlier in the week.

The exchange rate for euro in the online currency trading system known as Nima–the venue for exporters and importers to negotiate the currency rate in the secondary market–was 89,090 rails, it said.

The downtrend for the dollar's exchange rate comes after a series of record highs followed a ceaseless rally for the currency, causing massive price hikes for products ranging from dairy items to babies' diapers.

Fears over the availability of diapers whipped up a storm of angry messages on social media.

Currency Repatriation

In another directive by the central bank notified to the Iranian National Tax Administration, exporters of petrochemical goods and steel products are strictly required to bring back their hard currency into the country within two months.

According to a report by Mehr News Agency, these exporters account for the largest portion of the country's non-oil exports and sign a document obliging them to return their earnings in this period.

Mohammad Baqer Nobakht, the head of the government’s Plan and Budget Organization, told lawmakers on Wednesday that authorities have allocated $13 billion for commodities and medicine, with another $6 billion to help the underprivileged, according to the parliament’s website.

Anoushirvan Mohseni Bandpei, caretaker of Cooperatives Ministry, said on Friday that the government is considering a plan to offer "electronic coupons" to people to meet their basic needs. He added that special plans are in the works to help vulnerable groups of society, IBENA reported.

Last week, Iran’s Parliament sacked the minister of economic affairs and finance, the latest in a continuing shakeup of top economic personnel. In early August, lawmakers voted out the cooperatives minister and in July President Hassan Rouhani inducted a new central bank governor.

Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission, announced that CBI Governor Abdolnasser Hemmati is due to appear before his commission on Saturday to review the country's monetary and financial policies.