Since the beginning of the current Persian month on June 22, the USD has been traded mainly below the supportive level of 130,000 rials. The greenback fell from 128,000 rials on Wednesday to 126,500 rials on Saturday and further declined to 125,000 rials on Sunday – down 2.4% decrease compared to Wednesday’s close.
The euro changed hands for 143,000 rials for the day and the UK pound sterling fetched 159,000 rials.
Observers ascribe the declining pattern to the CBI’s efforts to bring the difference between open market rates and rates quoted in the Integrated Forex Deals System (locally known as Nima) to a minimum -- a move experts say is a prerequisite for launching the regulated forex market, Financial Tribune reported.
Nima is a secondary market developed by the CBI where companies sell their export earnings at rates lower than the open market. The currencies sold on Nima is only for importing goods.
Getting Closer
Addressing a meeting with businesspeople at the weekend, the CBI governor confirmed that the two rates have gotten closer over the past few months.
Forex trade reports in recent months show that the CBI has managed to intervene in both markets by increasing hard currency supply in the open market while pulling up rates offered in Nima.
The move has had a twin benefit for the CBI as it appeases the non-oil exporters who are compelled to sell their earnings at lower prices at Nima, and at the same time paves the way for the regulator to launch its much-touted regulated forex market.
The regulated market aims to stabilize the FX market by creating and organizing an open and transparent environment where currency is traded in cash via an electronic platform.
A member of the Majlis Economic Commission, Masoumeh Aqapour said Saturday the functionality of the regulated market is contingent on proximity of the two (open market and Nima) rates.
According to media reports, since the beginning of the current fiscal year (March 21) up until July 2 the difference between rates in Nima and the open market (for euro) declined from 62% in the first month of Iranian year to April 20 to 36% in the month to June 21. The difference fell further to 16% on July 2.
The Persian daily Donya-e-Eqtesad reported Sunday that the price difference for USD in Nima and open market fell further to less than 10,000 rials on Wednesday when the greenback was worth 117,000 rials in Nima.
Revenue Repatriation
A CBI deputy attributes the forex rate decline to CBI policies regarding repatriation of non-export earnings to the country, which has apparently strengthened the supply side and helped the CBI play its regulatory role in the forex market more efficiently.
The policy obliges non-oil exporters to sell a large part of their overseas earnings to Nima and local exchange bureaus.
Speaking to businesspeople in Yazd, Amirhossein Tayebifard, the CBI’s deputy for parliamentary affairs, said the bank’s rules have produced the desired results as more exporters repatriated their earnings.
New data on currency repatriation shows exporters brought back €4.56 billion of their overseas earnings since the beginning of the current fiscal on March 21 up until June 18.
The banking official also ascribed forex market stability to the expanding supervisory measures over exporters and commercial activities in recent months. Names of exporters, who despite regular appeals had failed to fulfill their currency repatriation commitments, have been sent to the judicial authorities, he said.