The Central Bank of Iran said moneychangers and banks can henceforth sell currency only up to €2,000 to each Iranian in one year, lowering the cap from €5,000.
Last month the CBI said selected banks could sell foreign currency up to €5,000 to each Iranian a year at rates announced on the Iran Central Exchange (ICE) website.
Per law, every Iranian can now buy $2,000 or equivalent a year at slightly lower rates compared to the open market by presenting their ID. That policy led to long lines of buyers of the cheaper currency who then sold it in the open market at higher prices to make an extra buck.
The measure is a part of the latest CBI move to control high forex rates.
Currency rates jumped to historic highs over the past several months with the embattled rial in free fall. Hit by the rapidly deteriorating economic conditions people seek safe havens to protect what is left of their hard-earned savings.
According to reports, the US dollar sold for 518,000 rials on Monday in Tehran's open market, 3% lower on the previous day. Melli Exchange and other bank-affiliated moneychangers quoted the greenback at 402,000 rials.
The euro lost 3.12% to buy 562,400 rials in the unofficial market while exchange bureaus quoted the European single currency at 436,271 rials.
The UAE dirham lost 2.71% on Monday and was quoted at 143,800 rials in the unofficial market. The GBP lost 2.96% to finish trade at 639,700 rials.
Gold prices also decreased on Monday. The Emami gold coin was quoted at 317.2 million rials, down 6.47% on the day before. Half Bahar Azadi coin lost 4.27% to buy 187 million rials, the Quarter Bahar Azadi coin was down 1.71% to end at 117.2 million rials. One gram of 18-karat gold was tagged at 25.75 million rials.
The CBI last month unveiled the Iran Center of Exchange apparently in the latest bid to control forex and gold prices. Mohammad Reza Farzin, the CBI governor, said, "Rates in this center will be the reference rates based on demand and supply of currency and gold, as well as key economic indicators."
Farzin has said that the CBI will “continue supplying importers of basic goods and medicine with cheaper foreign currency at 280,000 rials to the dollar” via Nima.
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.
The central bank had announced earlier that plans are underway to expand the role of Nima. "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.
Past Practices Inept
Earlier the head of the Majlis Economic Commission called on the CBI to end the “traditional ways to control the currency market”.
"The government must lead the market rather than being led by [forex] rates. To do so [CBI] policymakers need to revise the traditional approach in intervening in the market," Mohammad Reza Pourebrahimi was quoted as saying.
"We have to admit that the declining value of the national currency is largely because of structural problems in the economy," Pourebrahimi said. "It is necessary to remove the main disturbing factors if we want to strengthen the rial."
The MP criticized the CBI and the government for setting fixed forex rates saying it violates regulations. "As per law, the government must manage the currency market with floating rates."
He also complained that the government had not informed lawmakers about its plans for fixing the Nima rate at 285,000 rials to the dollar.
"The government needs to move towards a single forex rate system…So far we have several forex rates including the free market, Nima rate, Iran Center of Exchange rate and a rate that is used for importing basic goods."
"This shows that our economy is dealing with multiple problems," Pourebrahimi concurred.
