Economy, Business And Markets

CBI Committed to Unify Exchange Rates

CBI Committed to Unify Exchange Rates CBI Committed to Unify Exchange Rates

Governor of the Central Bank of Iran Valiollah Seif has reiterated that his bank is preparing to adopt a unified foreign exchange regime once the nuclear agreement is signed between Tehran and the six world powers, as financial restrictions would ease.

Iran has come under financial and economic sanctions in recent years due to a dispute with the West over its nuclear energy program. It is now negotiating with P5+1—the US, Britain, France, Russian, China and Germany—to reach a comprehensive, final deal this week that would limit parts of Tehran's nuclear program in exchange for the West lifting the sanctions.

The rial is currently traded at two rates, with one being decided by the CBI and the other set in the bureau de change market in Ferdowsi Street. The market rate is subject to fluctuations almost on a daily basis.

Seif noted that the interbank market will be the main reference for currency exchange in the unified system. However, he rejected the idea of immediately launching a foreign exchange bourse, saying CBI's priority is unification of exchange rates, ICANA reported on Tuesday.

"Due to the current stability in the foreign exchange market, setting up currency futures exchange seems to hardly affect the bureau de change market in Ferdowsi Street, a plan that should be postponed to the post-sanctions era," he argued.

"The foreign exchange rates will be defined based on equilibrium price, which is determined based on demand and supply rather than top-down directives," he emphasized. However, he said CBI's pivotal role is to prevent temporary shocks and soften market reactions in the unified system.

The official also predicted rial's slight appreciation against the US dollar when the unified exchange regime is implemented.    

Many market experts confirm that the central bank will have to unify the foreign exchange rates after sanctions are lifted if it seeks a stable currency market.