Currency rates dropped in Tehran’s unofficial markets after months of record highs. The US dollar traded at 525,000 rials on Wednesday in the open market down 2.4% on the previous day.
The euro lost 1.57% and was quoted at 579,700 rials, the UAE dirham was down 2.14% to buy 151,100 rials and the GBP fell 2.76% to finish trade at 654,200 rials.
Currency rates have jumped to historic highs over the past several months with the embattled rial in free fall. Hit by the rapidly deteriorating economic conditions people seek safe havens to protect what is left of their hard-earned savings.
The rail recovery comes after new powers were delegated to the Central Bank of Iran plus the establishment of a new trade center for currency and gold known as the Iran Center of Exchange (ICE).
The ‘Council for Coordination of the Three Branches of Government’ this week delegated more authority to the CBI to enable it prop up the rial and stabilize the chaotic forex market.
Working in Concord
Heads of the three branches (executive, legislature and judiciary) stressed the need and significance of working in concord to help restore calm to the currency market struggling with skyrocketing rates unseen in the history of the country.
Economy Minister Ehsan Khandouzi said the CBI already has enough power over the work of exchange shops and banks. "The CBI wants extra clout to effectively intervene in the market," Khandouzi said, newswires reported Sunday.
"Listed companies' refusal to repatriate their export revenue was among the main concerns of the CBI. Henceforth all listed companies, including those owned by the government such as oil/ gas firms, are obliged to abide by central bank rules for repatriating export revenue."
The CBI last week unveiled the ICE apparently in the latest bid to control forex and gold prices. Mohammad Reza Farzin, the CBI governor, said, "Rates in this center will be the reference rates based on demand and supply of currency and gold, as well as key economic indicators."
"The aim is to set up a place where supply and demand interact at a reasonable price," Farzin said without elaboration.
‘Real Need’
"Once the market is launched fully we will offer Quarter Bahar Azadi gold coins to curb [rising gold] prices," Farzin said earlier. The CBI also plans to use the center for currency swap and derivative forex instruments.
The idea to launch the center was initially floated as an amendment to improve and enhance forex operations. Farzin referred to the CBI's recent measures to help address the “real need for foreign currency” of businesses and individuals.
The senior banker said the regulator will continue supplying importers of basic goods and medicine with cheaper currency at 280,000 rials to the US dollar.
Last May the government officially ended to the costly and controversial currency subsides ($1=42,000 rials), aka as preferential currency, which was given to selected importers of basic goods.
ICE Prices Rise
Foreign currencies, however, are offered at lower prices at the ICE. According to EcoIran Web TV, each US dollar was sold at 438,500 rials on Wednesday, up 4,800 rials on the previous day. The market started hosting euro and dirham trade on Tuesday. Each euro was reportedly sold at 464,070 rials, and the dirham was priced at 119,310 rials.
The CBI said yesterday that $2 billion was supplied to the market via the newly-created ICE in the first week of its operation.
