Economy, Business And Markets

Call on CBI to Manage Forex Rates

Call on CBI to Manage Forex RatesCall on CBI to Manage Forex Rates

The Central Bank of Iran should strive to bring the exchange rate of the USD in the market close to 30,000 rials in order to foster economic stability, chairman of Iran-Iraq Chamber of Commerce said on Tuesday.     

“If possible, the CBI should try to manage the foreign exchange (market) rate close to 30,000 rials because  volatility will further delay business decisions by both  importers and exporters and negatively impact the economy”, Yahya Ale-Es’haq told Eghtesad News website.

On the future of forex rates, the official did not expect significant change unless “the decision of the UN Security Council members on the IAEA report on the issue of PMD or questions about Iran’s nuclear past and present creates a positive climate in the market.”

In the second meeting of the Joint Commission, established after July 14th nuclear deal with major powers, the parties came up with a draft about ‘possible military dimensions’ of Iran’s nuclear program. The draft is going to be put to vote in IAEA’s board of governors next Tuesday and is expected to put an end to IAEA’s investigation into Iran’s PMD case.

The fate of foreign exchange rates depends on supply and demand that are heavily affected by policies adopted by authorities together with internal and external factors dictated by time and consequences.

For instance, Ale-Es’haq said “A rise in commercial or speculative activities and foreign trips could increase demand for foreign currency. Meanwhile, forex supply could also rise as normalcy is restored to the country and/or export and foreign investments increase.”

The official concluded by saying that “At the moment, the CBI is the only decision maker that can reduce foreign exchange rates as it is the primary supplier of foreign currency to the market.”

The greenback’s market rate continued its rally throughout the past week and was traded for over 36,600 rials on Tuesday, stoking fears that the US currency could climb higher to reach record prices seen in 2012 when it sold for 40,000 rials.