The acceptance of forex trade at "negotiated rates" finally came after the government found itself unable to meet the tsunami of demand for imports at the subsidized rate that became particularly attractive after the forex rally in the open market intensified in recent weeks.
Economy Minister Masoud Karbasian said on Tuesday the stage is set for the trading of foreign currency at negotiated rates and that "the secondary forex market would be established within 48 hours".
Shapour Mohammadi, the head of Security and Exchange Organization, last week announced that based on a mechanism that would be devised in coordination with the Central Bank of Iran, Industries Ministry and SEO, the foreign exchange generated by small exporters will be offered in the bourse at the rate determined by supply and demand, according to Financial Tribune.
Concerns that the rate would face a government ceiling dampened the mood in the markets, but were later dismissed by First Vice President Es'haq Jahangiri.
The market responded positively to the news on Tuesday with reports suggesting that the rial was being traded at around 82,000 rials to the dollar, down from 83,000 rials on Monday.
The gold coin, which has also experienced a bull run alongside foreign exchange rates, lost some ground with the benchmark Bahar Azadi fetching 29.60 million rials ($704 at the official exchange rate), after having touched the all-time high of 30 million rials ($714 ) the previous day.
Majlis View
Mohammad Reza Pour-Ebrahimi, the head of Majlis Economic Commission, said the government's single-rate policy no longer works due to high demand.
In an interview with state TV late Tuesday, Pour-Ebrahimi criticized the government for lacking a strategy for a secondary market after it unified the USD's exchange rate and said the recent volatility was a result of that.
According to Pour-Ebrahimi, demand for import currency in the past quarter was about $27 billion and the government finally acquiesced in Majlis demand that it also recognize a secondary rate.
In the first stage, only exporters and importers will be allowed to trade in these "forex bonds" but later other traders could enter the scene, too.
According to the current multi-tier scheme, imports will receive their needed foreign currency at different rates, based on their priority with the least important class of imported goods, which the government has deemed "luxurious" facing an outright ban.
In the third category, exporters that do not have to register their currency earnings in the online Integrated Forex Deals System (known as Nima) can sell their hard currency to importers of "non-essential" consumer goods at "negotiated" rates.
This is the group allowed by the government to trade at the negotiated rate in the bourse.
The government decided to unify the US dollar's exchange rate at 42,000 rials on April 9 in response to volatility that saw the rial sink to l all-time lows against the greenback.
The Central bank of Iran has only allowed minor increases to thee rates so far. As of Tuesday, the bank had set the rate at 42,700 rials.
The unified rate has been criticized for creating a fertile ground for rent seeking whereby a select few get access to cheap currency for imports.
This week the CBI published the full list of importing companies that have benefited from foreign exchange at the preferential rate of 42,000 rials. The list, however, was criticized for excluding some large-scale imports such as cars, car parts and medicine.
Last week, Information and Communications Technology Minister Mohammad Javad Azari Jahromi for the first time disclosed the list of handset and mobile device importers who had received their foreign exchange at the official rate.