Mohammadreza Modoudi said in the outgoing fiscal (March 2018-19), the volume of orders for foreign exchange (for import) reached an unprecedented $76 billion due to currency market volatility and mounting demand from the private sector.
He said out of the $40 billion in non-oil exports by the end of the previous Iranian month to Feb.19, about $10.5 billion has been repatriated to the country. “This has put the CBI in tough situtaion,” he said in a talk with the state TV.
Currency repatriation has become a major bone of contention between the CBI and private companies in recent months. The controversy emanates from exporters’ reluctance to return their currency earnings to the Nima system whose rates are lower than the free market, Financial Tribune reported.
CBI Governor Abdolnaser Hemmati has often complained about exporters’ refusal to repatriate their export earnings saying that if they do so the CBI no longer would have to spend its own scarce foreign currency.
Last year the government decided to fix the USD rate at 42,000 rials on the premise that it will meet all currency needs at that rate, ignoring the pleas of economists and private sector leaders that the policy of imposing rates should be consigned to history.
However as demand for import at the subsidized rate (which was way below the open market) shot up overnight, the government panicked only to admit that its latest forex move was one more exercise in futility.
The government created different categories of goods that would be eligible for subsidized currency. One list included import of 25 basic goods that could get currency at preferential rates, another was for imports at the newly created rate called Nima. All unessential consumer goods were told to refer to the free market for their currency needs.
Highlight: The CBI often complains about companies’ refusal to repatriate their export earnings, and says if they comply the CBI no longer would have to spend its own scarce foreign currency