The Central Bank of Iran officially unveiled the Currency and Gold Trade Center apparently in the latest bid to control forex and gold prices that have jumped to levels unseen in the history of the country.
Mohammad Reza Farzin, the CBI governor, said, "Rates in this center will be the reference rates in the market based on demand and supply of currency and gold, as well as key economic indicators," the CBI website reported on Monday.
"The aim is to set up a place where supply and demand interact at a reasonable price," Farzin said without elaboration.
The new center will also have a floor for remittances, where export companies can sell their revenues in the form of hawala. The regulator was to launch the center earlier in the month but it was delayed because of “some technical issues.”
"Once the market is launched we offer Quarter Bahar Azadi gold coins to curb [rising gold] prices," Farzin said earlier. The CBI also has plans to use the center for currency swap and derivative forex instruments.
The center is currently located at the Iran Center Exchange premises in downtown Tehran. The CBI boss though said it will soon move to a new building. ICE, also known as the regulated market, is a network of certified exchange shops and banks dealing in wholesale currency under CBI auspices.
The trade center idea was initially floated as an amendment to ICE operations. Farzin referred to CBI's recent measures to help address the “real need for foreign currency” of businesses and individuals.
More than 600 licensed exchange shops and 50 branches of Bank Melli, Bank Mellat, Bank Saderat Iran, Bank Sepah and Tejarat Bank are selling foreign currency, he said.
"We have been supplying importers with enough forex in the Nima system," he said. "This system has recorded 48% increase in supply since the beginning of the year in March, whereas rates have gone up 17%."
The senior banker added that his bank will continue supplying importers of basic goods and medicine with cheaper foreign currency at 280,000 rials to the US dollar.
Nima is an online platform affiliated to the CBI through which exporters sell their overseas income in the form of hawala and companies buy for importing goods, machinery, equipment and raw material.
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.
Soon after businesses argued that with the end of the subsidy policy they would obviously need huge infusions of cash for importing raw material to bridge the gap between subsidized forex and open market rates. They urged the government to reconsider and compensate the liquidity crunch.
The central bank had announced earlier that plans are underway to expand the role of Nima in supplying the chaotic forex market. "Past policies had deficiencies that must be removed. A big part of forex is supplied via the Nima platform and our ultimate goal is to stabilize rates in this system at or near 285,000 rials to the dollar," Farzin was quoted as saying.
The CBI is set to allocate an estimated $80 billion for importing goods, $60 billion of which is already paid which is 30% higher than the payments in the last fiscal year.
Currency rates have jumped to historic highs over the past several months as the rial tanks and people seek safe havens to protect what is left of their hard-earned savings.
Dollar at New High
According to local reports, the US dollar traded at a new high of 500,700 rials on Monday in Tehran's open market, up 1.32% on the previous day. The ICE tagged the greenback at 447,600 rials. Melli Exchange and other bank-affiliated moneychangers quoted the dollar at 451,190 rials on Sunday, up 0.11% on the previous day's close.
The euro gained 1.06% and was traded at 535,200 rials. Exchange bureaus sold the European single currency for 481,870 rials, unchanged on the previous day. The UAE dirham gained 1.3% on Monday and bought 136,800 rials in the unofficial market. The GBP jumped 1.28% to finish Monday trade at 602,600 rials.
Gold prices also shot up on Monday. The Emami gold coin was quoted at 297.98 million rials, up 3.1% on the day before.
Half Bahar Azadi coin rose 2.58% to buy 159 million rials, the Quarter Bahar Azadi coin gained 2.88% to end at 107 million rials and one gram of 18-karat gold was traded at 23.4 million rials.
CBI officials have repeatedly blamed "price-gouging" for pushing up currency rates and urged the public to ignore temptations because “they can buy currency at exchange shops and banks at lower prices.”
