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Business And Markets

CBI Changes Rules for Forex Accounts

Buyers of the so-called “cheaper” currency must have a forex bank account with domestic financial institutions for moneychangers to transfer the sum only to those accounts

Banks and credit institutions are barred from paying the rial equivalent of deposits in foreign currency, a Central Bank of Iran official said.

"Withdrawals from forex accounts in rial is a violation of the rules of the Third Section of the Foreign Exchange Regulations. Banks are also barred from demanding customers agree to receive their [forex] deposits in rial," Soheil Nazari, the CBI's foreign currency market spokesman, was quoted as saying by IBENA.

The CBI last month implemented new measures to limit the amount of forex Iranians can buy and also raised exchange 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 last month said 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 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 were obliged to have at least $100 or €100 in their accounts for at least six months, otherwise they are not eligible to buy currency. 

However, Nazari added that banks are no more required to demand $100 for opening a forex account as the initial deposit is no more mandatory for receiving cheaper currencies. "Any bank that charges a customer $100 for opening an account is violating the law."

"Those wanting to buy cheaper currency up to the 2,000-euro limit can open a special foreign exchange account for banknotes without any initial deposit."

However, the official noted that the foreign exchange account must remain open for six months, and $100 must remain in the account during the six-month period. 

He further said that previous currency accounts for purchasing cheaper foreign currency are no more valid. "Applicants must open a new interest-free foreign currency saving account.

 

Only USD and Euros 

Nazari stressed that in this type of currency account is only for US dollars and euros and applicants for other currencies should approach exchange shops as before without the need to open an account.

There is no need for special documents or conditions to open a currency account to buy forex with a national card, and many banks, such as the Bank Melli Iran, currently open such accounts online.

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. Similar 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 deposited. 

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 monthly cash subsidies for those who buy the cheaper forex. Policymakers claim that those who can afford to buy €2,000 a year are affluent enough to be removed from the list of cash subsidy given to millions of economically less privileged Iranians 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.