In a press release published on its website, the CBI said it offered $70 million via the regulated forex market last week. It implied that the infusions “far outweigh demand and there is sufficient currency in the market”.
However, there were few buyers for the forex as only $5 million was bought by authorized exchange bureaus in the regulated market.
“This is despite the fact that the CBI recently raised the ceiling for purchasing currency by up to half a million dollars a day for exchange shops,” the regulator noted.
Earlier in the month the CBI increased the cap for buying currency to $500,000 a day for regulated market moneychangers.
The regulated market is a network of banks and certified moneychangers working under CBI supervision. Traders in the market deal in wholesale trade while retail business is said to be the function of moneychangers outside this market.
It seems that the CBI’s efforts in controlling the high forex rates have delivered at least for now. The US dollar has dropped more than 40,000 rials or 14% from its all-time high of 322,000 rials on October 18.
The greenback is now traded at 280,000 rials in Tehran’s open market and 277,500 rials in the official market operated by authorized moneychangers affiliated to the CBI.
CBI intervention notwithstanding, observers point to the declining expectations about higher rates among investors as a driver of the current forex trends. One element is the upcoming US presidential election, according to the Persian-language economic newspaper Donya-e-Eqtesad.
The increasing divisions and tumultuous political developments in the already fractured United States, plus uncertainty over who will occupy the White House in January, have become a source of concern for the international community including Iranian businesses and financial markets.
With Democrat challenger Joe Biden leading in national polls and the embattled president, Donald Trump, seen as the underdog, the newspaper said most investors in the region and beyond prefer a wait and see approach.
Secondary Market Boost
The CBI said non-oil exporters sold $670 million in the form of forex hawala at the secondary forex market, known as Nima, during the last week.
Nima is a trade platform supervised by the CBI and a venue where companies sell their export earnings at rates lower than the open market.
The secondary currency market is long grappling with shortages due to the declining oil revenues, falling exports and the persistent failure of export companies to repatriate earnings as required by law.
However, the CBI says repatriation of overseas earnings has “gained momentum” in recent weeks and its currency infusions have resorted some calm to the near permanent chaotic forex market.
All said, the secondary market rates have recently seen an upward trend. The dollar is now worth 268,730 rials drawing closer to higher open market rates.