Business And Markets

Iran's CB Has a New Chief

Iran's CB Has a New Chief
Iran's CB Has a New Chief

Ali Salehabadi was appointed Wednesday as the new governor of Central Bank of Iran. He replaces Akbar Komijani.
Salehabadi, 43, is a former CEO of the Export Development Bank of Iran. He also was the first head of the Securities and Exchange Organization, Iran’s stock market regulatory body.
He has a PhD in financial management from the University of Tehran and a masters in financial management from Tehran’s Imam Sadiq University.
An expert in Islamic banking, he is one of the founding members of the Iran Association of Islamic Finance and a prolific author in the field.    
The job of the CBI governor is proposed by the economy minister and the Cabinet headed by the president gives the final approval.
Following his appointment, President Ebrahim Raisi underscored the role of central bank in protecting the national currency and controlling inflation.
“In addition, the CBI should studiously oversee the performance of banks,” he was quoted as saying by the government website,
Soon after the appointment, Salehabadi appeared at state TV to outline his plans. Promoting banking ties with friendly countries, boosting non-oil export and building interaction with the private sector are among his key priorities, he said.
“Banks need to support production sectors and investment in non-productive sectors should be avoided.”
Elaborating the point, he added, “The CBI must efficiently monitor the lending targets and know for which purpose loans are given. This along with curbs on [banks’] borrowing from the CBI are, and will be, effective in curbing inflation.”
Selling non-financial assets of banks, recovering NPLs and measures to reduce the government’s reliance on the CBI to fund budget deficits are also on the CBI’s agenda.

Forex Policy

Regarding the CBI’s foreign currency policy, Salehabadi said the regulator will strive to boost the supply side to help restore stability to the forever chaotic forex market.
“Stability in the currency market is a policy that is pursued both by the CBI and the government. Predictability is key and our measures will be pivoted around this issue,” he told the state broadcaster.  
The currency market soon responded to his appointment. The dollar dropped below the psychological 280,000-rial and closed at 279,800 rials late on Wednesday losing 0.3%.    
Salehabadi said “close interaction” with private companies is crucial to boost non-oil export and, by extension, increase forex revenue.
Boosting non-oil trade is in line with government efforts to find sustainable income to replace plunging crude oil revenue due to the new sanctions imposed by the United States in 2018.
Declining oil exports, the crippling US restrictions on the financial sector and difficulties in importing raw material and intermediate goods have harmed Iran’s foreign trade in the past three years.
Sanctions have taken a heavy toll after the controversial former US president Donald Trump in 2018 abandoned Iran's 2015 nuclear deal with six powers and reimposed an economic blockade.
In light of the unprecedented penalties, the new CBI chief is likely to have a tough time coping with 50% inflation, recession, joblessness and the national currency that has lost over 75% of its value.
In a valedictory letter to his successor, Komijani congratulated him and expressed the hope that “structural reforms in the banking sector would continue” under his watch.




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