A monthly account of repatriated export revenues published by IRNA, shows that non-oil exporters returned €2.15 billion in the second month of the current fiscal year (April 21-May 21), highest in the H1. This is while Nima recorded the lowest amount of return in the fifth month with €937 million.
Average price of each euro traded in the secondary market was 102,467 rials in the second month, the lowest in the first half. The highest average price was seen in the fourth month--126,600 rials.
In this system, locally known by the acronym Nima, importers declare their currency needs, exporters register their currency proceeds and banks and authorized moneychangers act as dealers, Financial Tribune reported.
The CBI has control over currency demand and supply.
Rules related to the repatriation of export earnings became tougher after the United Sates re-sanctioned Iran in the spring of 2018 unleashing a severe shortage of foreign currency as oil exports declined cutting off a large chunk of currency revenue.
Exporters are now required to sell at least half of their export earnings to the secondary market at rates set below the higher open market price.
Total value of repatriated export revenues amounted to €20 billion, during the first year of secondary market operations (August 2018-19).
The CBI has a positive rating of the performance of the secondary market saying it has played a key role in reducing currency rate volatility in recent months.
Range of Incentives
The central bank has announced a wide range of incentives to persuade exporters to sell their revenues to the secondary market, including incentives for those who sell more than 70% of their revenue via Nima.
However, the narrowing gap between the forex rates in the secondary market and open market is seen by the CBI as the main reason behind the surge in currency repatriation through Nima.
Tehran Gold and Jewelry Union's data indicates nearly 16% drop in the average price of euro in the open market during the past six months, whereas the rate has increased at a steady pace in the secondary market.
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.
This has created new challenges for non-oil exporters, especially petrochemical sector that holds the lion share of non-oil export revenues.
In a recent interview with IRNA, Mohammad Reza Saeidi, the managing director of Jam Petrochemical Company, said that the narrowed gap between the rates in the free market and Nima has considerably lowered currency demand in the secondary market.
"Petrochemical companies are having trouble selling their export revenues in Nima…Importers prefer buying currency in the free market where there is no bureaucracy," he said, calling for a revision in CBI's forex policy.