The Central Bank of Iran is working on the legal framework to launch the promised regulated foreign exchange market in two weeks, the CBI governor said.
In a primetime interview with state TV late Tuesday, Abdolnaser Hemmati said the currencies to be traded in cash (banknotes) and the exchange bureaux and process purchases and sales would be in electronic format.
Earlier this month, rules for launching an official foreign exchange market were approved by the Money and Credit Council - a top financial decision-making body headed by the CBI boss.
It is believed that the new foreign exchange market is planned to provide an avenue for forex trade in a fair and transparent environment.
Also, the market will be broker-based and deals are to be processed as per a “order driven” mechanism supervised by a self-regulated body within the CBI framework.
Hemmati had said in November that the main function of the market will be to “discover prices and provide the people’s small needs and services.”
However, the efficacy of such a mechanism has been questioned by market observers on the grounds that the multi-tier nature of forex rates in the market will distort the very mechanism that is being created to help underpin forex rate stabilization.
$9.2b in Forex Repatriation
Hemmati pointed to non-oil exports as another avenue for currency earnings besides oil export revenues, saying that non-oil exporters repatriated via Nima (a local integrated system for foreign exchange deals), $9.2 billion from the time of its launch last year - which he said is not enough but is expected to gain momentum as more exporters bring back their overseas earnings.
He talked about a plan on CBI agenda to launch another supervisory mechanism to tighten its clout on the forex market, saying that the measure was undertaken following a recommendation by President Hassan Rouhani to end preferential treatment in the forex market and eliminate corruption in foreign trade.
The measure is aimed at preventing abuses that plagued the allocation of subsidized currency in 2018 whereby traders bought forex at subsidized rates (USD=42,000 rials) and sold it much higher rates in the black market.
According to the CBI website, the system is to provide banks, Industries, Mine and Trade Ministry, Customs Administration and the Iranian National Tax Administration access to information on importers’ performance.
Hemmati earlier lamented that the CBI provided importers forex for importing essential goods and services at subsidized rates, which he complained, were at times misused by importers.
“Indeed this is a serious concern for the government. to make sure that people are able to buy basic goods at subsidized rates,” he said.
The CBI governor assured citizens and business owners that the country has adequate amounts of currency reserves to provide for its medium term needs for two years.
”The channels are open for currency needs… we keep billions of dollars with foreign banks which can be used both inside and outside of the country,” he was quoted as saying by IRIB news agency.
Hemmati said Friday that Japan had resumed importing Iranian oil after China, South Korea, India and Turkey.
He used Instagram to inform the public that new oil revenues, backed by "billions of dollars in existing CBI resources with foreign banks," would soon enter the country's trade cycle.
China and India maintained their imports after the US reimposed economic sanctions in November. South Korea halted imports for four months, resuming them over the weekend.
