Valiollah Seif wrote on his channel in the popular messaging app Telegram that he welcomed different views concerning the forex market, but wrongful analyses of currency depreciation should be avoided.
“Factors influencing the foreign exchange rate have both economic and non-economic reasons,” he wrote.
“In recent days, some views have circulated about forex volatility and in one analysis, the reasons have been traced to banks’ sour assets, high interest rates, tight monetary policy and doubling of liquidity in proportion to the monetary base and also the negative balance of payments.”
According to Financial Tribune, the CBI chief attributed the fluctuations to external factors such as uncertainty about the US staying in the nuclear deal that Iran signed with world powers in 2015.
While acknowledging the non-economic reasons, Seif emphasized the importance of maintaining monetary and fiscal discipline, managing liquidity growth and strengthening domestic production.
He denied that high interest rates played a role in the crisis, as he believes it had the opposite effect by encouraging people to keep their money in banks instead of buying foreign currency. Seif also rejected claims that the massive capital flights had caused the volatility and said the country’s negative balance of payment is not linked to the government’s foreign debts.
According to Mohammad Reza Pour-Ebrahimi, chairman of Majlis Economic Commission, $30 billion have flowed out of the country during the second half of the previous year (ended March 20, 2018) and $20-25 billion worth of foreign exchange are currently being held outside the banking system.