The greenback climbed above 128,000 rials for the day and was traded higher at about 130,000 rials in Tehran’s black market.
According to the government news outlet IRNA, recent turmoil in the foreign exchange market is being blamed on a group of non-oil exporters who failed to repatriate their overseas earnings on the market.
The same reason was earlier made known by the governor of the Central Bank of Iran Abdolnaser Hemmati, Financial Tribune reported.
Referring to the gasoline rationing scheme that started in mid-November, Hemmati said a group of exporters, who often tend to abuse the negative psychological climate, are responsible for the new hike in currency rates.
"Recent trends in the market are mostly due to the exporters trying to make use (abuse) of the atmosphere after fuel prices increased. They are trying to sell their forex revenue from exports at higher prices," Hemmati, wrote in an Instagram post.
Sticking to the same view, Albert Boghzian, an economist and market analyst recommended punitive measures against the defaulters.
“Exporters should be compelled to repatriate their earnings. If they fail to comply they should not be allowed t export,” IRNA quoted him as saying.
In his opinion “the defaulters should be punished simply because if their export earnings are not returned it means that their export business is not in the interest of the country”.
Boghzian pointed to the outlook of price rise as the main reason behind the current forex market trends. “As such, both buyers and exporters expect prices to increase”.
The perception that “prices may go higher” has convinced buyers to rush to market and this has given rise to demand.
Guided by the same perception, “exporters and other currency sellers tend to delay selling their currency in the hope of making more profit in the future”.
Ineffective Speculators
He dismissed the role of speculators in the currency market, saying their impact is rather limited.
“It is hard to imagine that the recent hike in currency prices is due to speculators’ activities,” he said, adding that “they may create some temporary turbulence in the market…but this is short-lived”.
Reacting to the forex market fluctuations, Hemmati took to Instagram on Friday afternoon and said he would do all he can bring back stability to the forex market.
“I assure the people that the CBI will make all efforts to bring back stability to the currency market as it has done in the past.”
Hemmati underscored the spillover effect of gasoline prices and the ensuing inflationary expectations on different markets, including the currency market.
“This is something normal and can temporarily disrupt the relatively stable forex market,” he noted.
On November 15, the National Iranian Oil Products Distribution Company (NIOPDC) announced that gasoline had been rationed and prices raised between 50% to 200%. The new scheme came into effect immediately.
Before the new bout of forex market volatility began in November, the market was calm, especially since the beginning of the current fiscal year (March 20).
The CBI has been commended for the stability via what its officials describe as intervention in the market with the help of affiliated moneychangers.