Economy, Business And Markets

Time Not Right for Forex Reforms

Time Not Right for Forex Reforms
Time Not Right for Forex Reforms

With a debate heating up around fluctuations in the currency market and the need for unification of the foreign exchange rates, an administration official has argued that time is not right for currency reforms.

The deputy minister of agriculture, Ali Ghanbari, has said that the unification of the official and unofficial forex rates should be implemented when the Central Bank of Iran gets “more independence” from the government and the economy is “less reliant on oil sales.”

Citing the official, the news website Banker said on Monday that monetary policy should improve in a way to help the economy recover and government reduce its size.

Ghanbari called for structural reforms in the CBI and a fundamental change in the procedure through which a governor is elected. “In this regard, the CBI better take advantage of the IMF (International Monetary Fund) and the World Bank expertise that previously helped the central banks of other countries to be self-reliant,” the website quoted him as saying.

He also laid emphasis on the fact that as long as the national budget is heavily reliant on oil revenues, the unification of rates could only be a setback for the struggling economy.

He warned that any shock in the foreign currency system now could lead to a “national budget crisis” since oil revenues which are in dollars currently account for at least one-third of the budget.

The official urged the CBI to step up supervision over the unofficial foreign exchange market in a bid to help stabilize the volatile market.