Foreign exchange rates in Tehran were again of the declining order on Wednesday as several factors prompt the rial to pare much of its unprecedented losses since the beginning of the current fiscal in March.
The USD exchange rate broke below another psychological level in early trading as the national currency was quoted at around 99,000. The greenback gained slightly in the afternoon and was traded above 100,000 rials.
Regular injection of currency into the market by the Central Bank of Iran and the flow of export earnings into the market as well as brighter prospects for Iran's oil exports are said to be among the key factors pulling forex rates down. The euro was traded for 125,000 -- below the support level of 130,000 rials.
CBI boss Abdolnaser Hemmati told a meeting this week that in a meeting with Ayatollah Seyyed Ali Khamenei the Leader had emphasized CBI independence and improving the rial value.
"The CBI and the banking system will mobilize its efforts to realize the Leader’s wishes", he said in a meeting with senior bankers in Tehran.
Hemmati on Friday hailed the "relative stability" in the forex market, which he said has emerged alongside CBI efforts to strengthen the national currency.
In September, a top government body, headed by President Hassan Rouhani and the heads of parliament and the judiciary authorized the CBI to intervene in the foreign exchange market in support of the tanking rial.
The national currency had dropped past 100,000 rials to the US dollar for the first time in late July as Iranians braced for August 7 when Washington was due to reimpose the first batch of economic sanctions.
Another New Move
As part of its market control mechanisms, the CBI has also started a new policy to limit bank transfers via POS devices. Every Iranian can only transact a specific amount per day by sending his/her national ID card number to the bank.
This rule was officially implemented on Saturday and aims to limit money transactions via the POS machines outside the country and monitor bank transactions.
Pedram Soltani, vice president of Iran Chamber of Commerce, Industries, Mines and Agriculture in a tweet on Wednesday warned that the new limits on transactions and further forex controls could also be seen as the country was headed toward economic recession.
Kamran Nadri, an economist, told prime time TV on Tuesday that the combination of accumulated inflation, exploding liquidity levels and the effects of US sanctions is the main reason for the devaluation of the national currency.
On Aug. 6, the Trump administration announced it would re-impose sanctions on Iran after withdrawing from a nuclear agreement the US government had signed in 2015 when Barack Obama was president.
However, the European Union, Russia and China are seemingly trying to uphold the agreement to allow businesses and financial transactions to continue with Iran.
The European Union's foreign policy chief Federica Mogherini said on Monday a system to facilitate non-dollar trade with Iran and circumvent US sanctions could be in place before the year is out.
