Business And Markets

CBI: Forex Market Under Control, No Manipulation

CBI: Forex Market Under Control, No Manipulation CBI: Forex Market Under Control, No Manipulation

Bureaux de change did not instigate or affect the recent depreciation of the rial, said Hamid Tehranfar, deputy governor of the Central Bank of Iran on Friday.

“If the foreign exchange market is destabilized, there is a chance that bureaux de change owners do things to drive up exchange rates,” said Tehranfar, “but the foreign exchange market is currently under the central bank’s control.”

Various reasons led to the rial’s recent depreciation but the main reason was the push by the Saudis to keep up oil production on the back of global oversupply, which led to a sharp drop in crude oil prices.

With plummeting oil prices, Iran’s oil revenues – already under duress due to United Nations oil sanctions – have plummeted, decreasing foreign receipts and pressuring the budget, said the deputy governor.

Oil prices are near a six year low pressured by weakening demand and a supply glut prompted by the US shale boom and OPEC’s refusal to cut output. Crude oil is heading for its worst year since 2008.

Global benchmark Brent crude has fallen 49.5 percent in 2014 as demand growth slowed, the United States expanded output and OPEC, dropping its strategy of trimming supply to keep oil around $100 a barrel, chose instead to defend market share.

The rial lost over seven percent against most currencies in November on tumbling oil prices and failure to negotiate a final deal on Iran’s nuclear dispute, and pressure against the currency continued into the year’s end.

On Dec. 30, when asked about the depreciation of the rial, CBI Governor Valiollah Seif said, “The central bank is closely monitoring the foreign exchange market and it will control volatility if deemed necessary.”

When questioned on getting bureau de change permits, Tehranfar said the central bank is giving bureau de change permits, but getting one takes time as applicants must adapt to new regulations.

Many bureaux de change are on the waiting list and the CBI is giving permits at its own discretion. “The central bank has not given a timetable for issuing [bureau de change] permits,” said the deputy governor.