Market analysts have supported new rules announced by the Central Bank of Iran obliging buyers of cheap foreign currency to have forex bank accounts.
Ehsan Naser, member of the Iran Chamber of Commerce in a talk with the news agency IBENA said opening of foreign currency accounts by buyers is a positive move based on market reality.
"Truth be said, we cannot ignore the root problems and need to realize that there are both real and synthetic demand for foreign currency," Naser said.
The CBI last month implemented new measures to limit the amount of forex Iranians can buy and also raised the rates.
Per law, every Iranian can buy a fixed amount of currency at slightly lower rates compared to the open market by presenting their ID. The rule led to long lines of buyers who sold it in the open market at higher prices to make a profit.
The CBI says it has “thoroughly studied the flaws” in the past policies. It 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 that it had announced in the not too distant past.
Two months ago the CBI said selected banks could sell currency up to €5,000 to each Iranian a year at rates announced on the Iran Central Exchange (ICE) website.
After that it said buyers of the so-called “cheaper” currencies must have a forex bank account with domestic financial institutions, requiring moneychangers to transfer the sum to those accounts. Besides, buyers are obliged to have at least $100 or €100 in their accounts for at least six months, otherwise they are not eligible to buy currency.
"It is indeed difficult to respond properly to the real needs for currency due to the [seemingly] unreal demand. However, within an efficient framework we can better manage” the forex market, Naser said.
He added that there are those who really do not need foreign currency and want to convert their rials into other currencies to protect the value of their money against the tanking rial.
"This demand is bogus but it exists and covers a significant portion of foreign currency needs,” the market observer concurred about the unending demand for forex in Iran for decades as a safe haven.
‘Significant Role’
The fight against such rent-seeking is not easy, he said, adding that the new regulations calling for opening of foreign currency accounts “would likely play a significant role in controlling” the chaotic forex market as exchange rates keep climbing apparently with no end in sight.
"In my opinion, the foreign currency account is good and effective. You can convert your money into foreign currency without losing its value to inflation.
He concluded by saying that "Some people are looking for dollars and if they know that dollars are available in the market as much as they need, their uncalled for excitement will decrease and the psychological atmosphere in the market will be calmer."
The latest CBI move ostensibly is to prevent middlemen from using the ID cards of the poor and homeless and use them as money mules.
It is expected to also help revive foreign currency accounts in the banks. Such accounts were in vogue up until late 2010s after which the government instructed banks to pay the forex deposit equivalent in Iranian rials, rather than the currency put up by the accountholders.
Since then various policies came into force to restore the people's trust in forex accounts but flopped.
Forex accounts will also help raise the transparency of financial transactions, the CBI has said without elaboration.
It also has set another restriction for buyers of currency per which they must wait for one full year before they can make new purchases. In the past buyers could make a purchase once in every fiscal year.
There are reports about the possibility of cutting the allocation of cash subsidies for those who buy the cheaper foreign currency. Policymakers say those who can afford to buy €2,000 a year are affluent enough to be removed from the list of cash subsidy given to the economically less privileged every month.
Ali Bahadori Jahromi, the government spokesman, recently said that purchasing cheap currency will be considered as a criterion for assessing a household’s financial status and consequently their eligibility for receiving the cash subsidy.
Currency rates have scaled to historic highs over the past several weeks as the rial tanks and people hunt for safe havens to protect what is left of their hard-earned savings. Barely six months ago the dollar bought 300,900 rials. On Monday it was quoted at nearly 510,000 rials.
