The figure indicates that the repatriation of export earnings has gained momentum after the secondary market registered a steady growth in foreign exchange rates during the past few months.
This came after the gap between prices in open and secondary markets were substantially reduced, thanks to the Central Bank of Iran’s efforts to stabilize the foreign currency rate in the open market while pushing it up in the secondary one.
CBI's website announced that the average price of each euro traded in the secondary market has reached 119,433 rials, Financial Tribune reported.
Euro was sold at 125,940 rials in Tehran's open market on Wednesday, up 400 rials (or 0.32%) compared with the previous day, according to Tehran Gold and Jewelry Union's website.
The US dollar was priced at 113,900 rials, 500 rials (or 0.44%) higher than Tuesday’s close. The greenback was sold at 108,109 rials in the secondary market.
Foreign currencies amounting to €1.8 billion have been sold in the market over the past three weeks.
Daily sales in Iran's secondary forex market recorded six-month highs in the past few days, as it traded €219 million and €210 million on Oct. 8 and 9 respectively.
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.
CBI exercises oversight and controls currency demand and supply.
Rules related to the repatriation of export earnings became tougher after the United Sates reimposed sanctions on Iran in the spring of 2018, triggering a severe shortage of foreign currency when oil exports declined.
Exporters are now required to sell at least half of their export earnings at the secondary market at an exchange rate set below the higher open market price. As per the regulations, at least 20% of total money sold in the secondary market must be in cash.
Steady Rates
Forex rates have been experiencing fewer fluctuations in recent weeks.
The USD has hovered around 113,000 rials. Euro and other currencies also experienced similar motions, with euro being sold for 124,000 to 125,000 rials.
In maintaining currency market stability, CBI is the key player. After steep volatilities in the summer of 2018, the regulator was authorized to intervene, mainly for balancing the supply/demand equation.
CBI Governor Abdolnasser Hemmati, in a recent speech, said his bank has not used its forex reserves to prop up the market.
While defending CBI's recent measures, Hemmati said, "We had to have an eye on transactions to prevent capital flight. We had to take main players of the forex market into consideration, without creating rents … We also had to make sure exporters would benefit from bringing their income back to the country … CBI's constant presence in the market was also necessary."