CBI Hopes Calm Will Return to Markets

EghtesadOnline: The governor of Central Bank of Iran said he hopes stability in financial markets would be restored in the coming weeks as "excitement arising from political developments ebbs".

News ID: ۷۸۵۷۳۸

09 January 2021

In a note posted on his social media account Thursday, Abdolnaaser Hemmati said such hopes have arisen from the probable "increase in crude oil and petroleum exports" and promising reports about unlocking CBI assets overseas.

Apparently taking into account political developments in the United States, Hemmati posted the note on his Instagram account hours after the US Congress certified Joe Biden as the next president.

In the note, he condemned the belligerent Donald Trump as “number one enemy of the Iranian people" whose inauspicious term is coming to an end in "utmost disgrace".

The senior banker recalled Trump's efforts to impose “unprecedented sanctions" on Iran that spared no sector of the economy and foreign trade.

Trump announced the economic siege after abandoning the Iran nuclear agreement in May 2018, which Hemmati said has taken a toll on Iran's oil export, among other things.

"Since the beginning of fiscal 2019-20 until now, the country's revenue from oil export has been less than $20 billion to which the CBI has very limited access. This is while revenue from oil export in previous years was more than $40 billion a year and the earnings were accessible.”

Forex rates skyrocketed twice since the US imposed new sanctions after leaving the landmark nuclear deal. In the first bout of forex volatility in the spring of 2018, the national currency lost close to 70% with the dollar rising from 50,000 rials to 180,000 rials in October 2018. The rial later strengthened but was traded between 130,000 rials-160,000 throughout the year ending in March 2019.

In the latest shock, in May 2020 volatility was spurred by shortages arising decline in foreign trade due to the Covid-19 plague and the US economic siege.

Price of the dollar almost doubled in less than six months from May to mid-October reaching an all-time high of 323,000 rials. The greenback has now retreated from its peak as optimism grows over easing of sanctions as a new president comes to the White House in less than two weeks.

The American currency has declined 20% from record highs and was quoted at 255,000 rials on Thursday.