Forex sold in the secondary market (known locally as NIMA) grew 48% in the five business days last week (May 9-13) compared to the similar period a week earlier, the CBI website reported.
The total was €313 million -- enough to meet limited import needs.
Nima is an online platform affiliated with the CBI where exporters sell their overseas currency income and companies buy it for importing goods, machinery, equipment and raw materials. The rates are usually below open market rates.
The CBI said demand for foreign currency didn't grow proportionally as only €138 million was bought from the market during the week to post a 23% growth compared to a week earlier.
The trade volume at Nima had declined due to government restrictions on businesses to help control the spread of coronavirus, and closure of exchange bureaus, which are in charge of transferring non-oil export earnings back home.
Earlier in the week CBI Governor Abdolnasser Hemmati had said “repatriation of export earnings will be back to normal” as non-oil exports resume and money-changers reopen.
INTA to Refund VAT
In related news, Iran Export Confederation said the Iranian National Tax Administration will start refunding value added tax paid earlier by non-oil exporters on May 21.
As part of incentives to non-oil exporters, their VAT is refunded a month after they repatriate 70% of their earnings.
Exporters have complained about their money, paid earlier as VAT, being blocked by the Iran National Tax Administration, saying that they need the money to remain in the tight market.
The issue has become a matter of hot debate between exporting firms and the CBI. The former claim they are unable to fully repatriate their earnings due to US restrictions on money transfer to and from Iran. The CBI, under monting pressure to secure forex for key commodities is indifferent to their cries and is deeply disappointment about the (meager) amounts of repatriated earnings.
In a letter to President Hassan Rouhani in March, head of the Iran Chamber of Commerce, Industries, Mines and Agriculture. Gholamhossein Shafe’i, urged the president to order INTA to unfreeze a portion of the blocked money to enable exporters run their companies under the tough Covid-19 conditions.
As per rules, export companies must sell at least half their earnings in the secondary market. Petrochemical exporters must bring back at least 60% of their overseas earnings and sell it via Nima.
Exporters are also obliged to sell at least 20% of the total proceeds in cash to authorized moneychangers. The balance can be used to import goods, machinery and equipment either by the exporter or other third parties.