Exporters of non-oil goods sold €16 billion ($17.8 billion) in their overseas revenues on the secondary foreign exchange market, known as Nima, since the beginning of the current fiscal year that ends on March 19.
This market is a platform affiliated to the Central Bank of Iran where importers declare their currency needs, exporters sell their forex proceeds and banks and authorized moneychangers function as dealers.
CBI said on its website that repatriation of exporters’ overseas earnings has gained pace in recent weeks, adding that exporters have returned $1.5 billion in the ongoing calendar month (started Feb.20).
The pace of repatriation has made supply of foreign currency in the market outweigh demand as importers purchased €13.7 billion in the secondary market during the year, according to data provided by Nima.
CBI says the supply and demand mechanism determines currency rates in this market and rates have dropped due to “good flow of currency” mainly by petrochemical companies.
Currency rates at Nima are lower than in the open market. Each dollar on Nima is sold for 139,840 rials while it is bought at 137,432 rials from exporters.
A dollar was worth 158,000 rials in Tehran’s open market on Monday.
Tighter Regulations
Rules for repatriation of export earnings were tightened after the United Sates imposed new sanctions in the spring of 2018 unleashing a severe shortage of foreign currency as oil exports were rendered impossible cutting off the main source of hard currency for Iran.
The CBI requires exporters of non-oil goods to sell at least half their export currency in the secondary market at rates that are below the higher open market price. Petrochemical companies, however, are obliged to bring back at least 60% of their overseas earnings and sell it via the secondary foreign exchange market.
As per law, at least 20% of the total proceeds sold in the secondary forex market must be in cash. The balance can be used to import goods, machinery and equipment either by the exporting firm or any other third party.
To encourage exporters to repatriate their earnings, the government announced tax holidays for law-abiding exporters. For example, export companies will not pay tax on their overseas income if they fulfill their currency commitments on time. The tax authority will also refund value added tax to such exporters within a month from the date of repatriation.
