Trade at the wholesale forex market, known as the regulated market, has declined sharply due mainly to restrictive currency trade policies.
Value of currency deals in the market has dropped to $2 million per day, almost a fifth compared to the recent past, the semiofficial Fars News Agency said, citing data published by the Iran Currency Exchange, the body in charge of managing the regulated market.
The regulated forex market is a spot market dealing in wholesale currency in cash via authorized exchange shops and banks operating as brokers.
It is seen as a government measure to restore some discipline to the chaotic currency market and was created as an open and transparent system where currency is traded via an electronic platform.
Observers see a close link between tight rules imposed recently on purchasing currency by the Central Bank of Iran and the sharp decline in currency trade in the regulated market.
Earlier this month, the regulator further tightened restrictions on retail currency sale by authorized exchange bureaus by imposing new caps on the maximum currency purchase for Iranians travelling abroad.
In a bylaw to the moneychangers, the CBI asked them not to sell more than €2,000 for air travel to countries that require visa and €300 for visa-free countries.
Likewise, travelers taking land, rail and sea routes to any destination cannot buy more than €300.
The quota is for adults aged 18 and above once a year, according to a press release published by IBENA, the news agency affiliated to Monetary and Banking Research Institute.
Prior to that, all overseas travelers could buy €2,200 from official moneychangers by showing a flight ticket or any other overseas travel document.
Citing market observers, the news agency said that steep decline in currency trade should not be construed as drop in demand. “It simply means that forex deals have moved to unofficial market”.
In a similar vein, the CBI Governor Ali Salehabadi earlier spoke about a plan to set up an electronic trade platform to register retail forex demand.
The platform is reportedly for addressing “the small needs” of the people for foreign currency. People can register the amount they need at the platform and after that approach authorized exchange shops to receive the currency,” the senior banker said, expressing the hope that the new system could ease access to foreign currency and help improve transparency in forex trade.
With the new tougher restrictions on foreign currency, the price difference between the unofficial market and authorized exchange bureaus in the regulated market has become bigger.
Price arbitrage has increased to 33,000 rials. A US dollar was sold for almost 280,000 rials in Tehran’s free market on Monday while official exchange bureaus tagged it at 248,000 rials.
