The Central Bank of Iran on Wednesday announced new foreign exchange rates based on which commercial banks should convert their currency assets.
According to a press release posted on the CBI’s website, banks are now allowed to prepare their financial statement based on new exchange rates, which has been increased substantially compared with the previous conversion rates.
As per the announcement, each euro will be equal to 220,000 rials (or equivalent in other currencies) and the US will be worth 200,000 rials, respectively indicating a 70% and 81% increase compared with previous parity rates in which a euro was worth 129,000 rials and a USD was valued 110,000 rials.
As a matter of policy, the CBI regularly updates parity rates with the national currency to be used by lenders as the basis for preparing their financial statements. The latest conversion will guide 18 lenders listed on the stock market to draft or revise their annual financial statements ending on March 20.
Banking decision-makers for long were under criticism for setting parity rates that were much lower than exchange rates quoted at the open market. Observers say devalued forex rates would have a negative impact on banks’ balance sheets.
Low forex rates particularly impact the performance of banks listed with the stock market as their forex assets are normally undervalued in their financial reports.
Increasing exchange rates was one of the 10 measures approved by the government earlier in December to support the stock market.
Accordingly, the parity rate for converting foreign exchange rate was supposed to be increased up to 90% of the currency rates quoted at the secondary foreign exchange market known as Nima-- an online platform where exporters sell their overseas currency income and companies buy for import.
A USD at Nima market is currently worth about 238,000 rials.
The CBI said lenders can use the income from converting their currency assets for raising capital or reducing their losses in financial statements.
