Despite apprehensions that currency rates would soar after US announcement on Monday that it was ending sanction waivers on Iran oil importers, the forex market response to the news remains lukewarm.
The governor of the Central Bank of Iran, Abdolnasser Hemmati, wrote in an Instagram post Wednesday that the “delusion” of price shock in the forex market following the US decision faded away, thanks to CBI measures.
Currency rates rose slightly a day after the anticipated announcement when the dollar briefly touched the resistance level of 140,000 rials, up from 137,000 rials on Sunday.
According to the Persian daily Donya-e-Eqtesad, low demand plus active role of the CBI via its affiliated exchange offices foiled some forex dealers’ plans to jack up rates riding on the psychological climate created by the hostile US government.
The regulator’s intervention averted further rate hikes on Wednesday. Each USD traded for 139,000 rials. The euro fetched 157,000 rials and one UK pound changed hands for 181,000.
In his post, Hemmati pointed to claims made by US officials that they want to reduce “Iran’s oil export to zero” and rejected the threat as another delusion that will not come true.
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However, he confirmed sharp cuts in the volume of Iran’s oil export under the threat of sanctions and called on the government to adjust lost oil revenues by promoting non-oil exports.
“Reducing Iran’s oil export to zero is another illusion but any reduction in oil export revenues should be compensated by cutting government spending and finding alternative sources of income,” he wrote.
Hemmati referred to promoting non-oil exports as a viable substitute for shrinking oil revenues, saying the CBI will adjust its foreign exchange policies to encourage exporters to repatriate their overseas earnings to the country.
The CBI is struggling to convince export companies to return their currency earnings to the economic cycle and has offered incentive packages including exemptions for currency earnings up to a fixed ceiling.
According to published reports, exporters barely returned one-third of their earnings in the last fiscal (March 2018-19).
