First Vice-President Abbas Mokhber, Economy Minister Ehsan Khandouzi and the Governor of the Central Bank of Iran Mohammad Reza Farzin went to the Majlis on Saturday to brief lawmakers on the state of the forex and gold market where prices have shot up to historic highs.
Even though the meeting was held behind the closed doors, local media published news and views regarding what transpired in the chamber based on interviews with some participants.
"The CBI governor elaborated on the reasons behind the ongoing price rises stressing that the regulator had managed to handle several problems in this regard," MP Nezameddin Mousavi told IRNA. He did not say what problems had been solved.
Alireza Salimi, another lawmaker, blamed external sources for announcing “unreal rates” and disturbing the market. "Farzin's explanations showed that the country has no problem in foreign trade and making transactions… But factors outside the country's borders are disrupting the market."
"The economy minister also said that some traders have been detained for destabilizing the market in recent days," Salimi said. "Some of them confessed that have had plans for subverting the market." He did not name names or provide much-awaited details.
The lawmaker, however, insisted that CBI chief now has sufficient clout to take the necessary action to stabile the currency market. "The Majlis is willing to bestow more power to the central bank governor."
MP Mohammad Reza Mirtajjodini said the "First VP assured the parliament about government plans for controlling the [forex] market in the near future," Tasnim news agency reported.
‘Working in Tandem’
"It was agreed that the parliament and government hold joint sessions on the problems visiting the currency and gold markets," he said. "The Majlis and government must work in tandem to tackle the current state of the market."
According to unofficial media reports, the US dollar traded at a new high of 564,000 rials on Saturday in Tehran's open market, up 3.96% on Thursday. Melli Exchange and other bank-affiliated moneychangers quoted the greenback at 452,076 rials, unchanged on Thursday’s close.
The euro lost 4.26% and was traded at 596,900 rials. Exchange bureaus sold the European single currency for 482,325 rials, unchanged on the last trading day. The UAE dirham lost 4.13% on Saturday to buy 156,500 rials in the unofficial market. The GBP jumped 3.90% to finish Saturday trade at 673,800 rials.
Gold prices increased on Saturday. The Emami gold coin was quoted at 309.7 million rials.
Half Bahar Azadi coin increased to 164 million rials, the Quarter Bahar Azadi coin was traded at 111.2 million rials and one gram of 18-karat gold was worth 24.72 million rials.
The regulator unveiled a new currency/gold market this week apparently in the latest bid to tame runaway prices that have peaked to levels unseen in the history of the country.
The CBI says it wants to gradually expand the scale and scope of the so-called Iran Exchange Center (ICE) and replace it with the free (unofficial) market. When the market is fully developed the CBI says it can administer policies to better manage the currency market.
It will be the main market for forex and gold, the CBI boss Farzin said. “We have plans to introduce new financial instruments for trading gold and currency including futures, forward instruments, forex salaf contracts…”
The ICE will also have a floor for remittances, where export companies can sell their revenue in the form of hawala.
Farzin has repeatedly blamed inflationary expectations as the main culprit behind the skyrocketing forex rates. “A wide range of factors are impacting currency prices that must be controlled by other organizations. Insofar as the CBI is concerned, we decided to create a center where the real demand for foreign currency can be addressed.”
