Economy, Business And Markets

CBI Will Control Currency Shocks

CBI Will Control Currency Shocks CBI Will Control Currency Shocks

Central Bank Governor Valiollah Seif said on Saturday that the bank will by no means intervene in the currency market even if the dollar or other foreign currencies may start losing value against the rial. However, he underlined, the central bank will try to "control" sudden shocks.

His remarks came two days after the P5+1 (Russia, China, France, Britain, the US plus Germany) and Iran signed a nuclear deal was in Lausanne, Switzerland over Tehran's nuclear energy program.

Seif had said earlier in presence of representatives of the private sector that 30,000 rials for a dollar is quite a "reasonable rate." The dollar was traded about 32,500 rials in Tehran on Saturday, down by 1.3 percent compared to Friday.

The governor's latest statement was made following rumors which once again have spread around the notion that the government is not particularly psyched about the possibility of the dollar losing value against the rial.

Experts had opined that this is due to the fact that the administration may face budget deficits especially that oil prices have sharply dropped. Pundits are of the opinion that in the given situation the dollar rate should not drop below 32,000 rials. Moreover, they have commented that the official and unofficial exchange rates must be unified at nearly the same value.

The governor refused to make any predictions about foreign exchange rates in the current fiscal year, which started March 21. He noted that the foreign exchange market enjoyed a relative stability in the past year, which is a great achievement.

The Central Bank of Iran will support a stabilized currency market that would help economic growth, improve manufacturing and create job opportunities, Seif said. "The most important factor for the CBI is to avoid sharp fluctuations and maintain the stability of the market."

On a different note, he also said that trimming zeros from the national currency is among CBI's top priorities in the near future. "This measure however depends on inflation. A single-digit inflation is required if the bank is to remove several zeros of the currency."

When asked how the lifting of sanctions would benefit the Iranian economy, Seif limited his answer to the banking sector, saying that banking limitations and hurdles on transactions will be removed. Furthermore, he said, the immediate effect would be that while assuring higher levels of reliability and security, banks will be able to provide better services and assistance to international trade.