Economy, Business And Markets

Businesses Push for Stable, Single Forex Rates

Businesses Push for Stable, Single Forex Rates  Businesses Push for Stable, Single Forex Rates

Stable forex rates will help expand exports while rendering decision-making and planning easier in the key sector, Abolfazl Sharif, a senior member of Iran Chamber of Commerce said on Tuesday.

Stabilizing the hard currency market has been a priority of the government and it intends to minimize the volatility of the legal tender and raise its value against foreign currencies, eximnews website reported.

“Sometimes it takes between one to six months for exporters to be able to cash on the goods,’’ he said, adding that wild fluctuations in the forex market could add to risks associated with investment and export and obviously hurt exports.

 “Exporters’ primary plea to the government is lowering and unifying the currency rates. This can and will lead to an increase in private sector investment, improve the manufacturing base and create jobs.”

Rising forex rates may seem beneficial to exporters at first glance but the apparent benefit is misleading simply because higher forex rates also translate into higher factory prices for domestically-manufactured goods and eventually decrease in exports.

“Higher forex rates mean higher bills for imported machinery and raw material as well which again lead to higher prices for domestically-consumed goods,” he said adding that government’s anti-inflationary policies are not compatible with the pattern of rising forex rates.

The analyst referred to the surge in currency prices over the past six months and said that it has been “moderate and gradual” in the range of 2,000-3,000 rials. The increase has had no considerable effect on Iran’s international trade because it was “not huge or sharp.”

On Monday the greenback sold at 36,930 rials in Tehran market.

Pointing to the recent debate about unifying forex rates he said that the success of the plan depends on oil prices as it is the major source of the government’s foreign currency revenue.

 “The plunge in oil prices and the consequent fall in oil revenues have not left much room for government to maneuver in the foreign exchange market,” Sharif said.

Implementation of  the nuclear agreement  with the P5+1 would ease international trade and help lift the economy. “Then the government and CBI will have more power to go ahead with the single currency rates.”

Curbing the activities of greedy middleman and brokers in the market, efficient monitoring of bureaux de change activities and buying foreign exchange only from authorized money changers can have a considerable positive effect on the market, the news agency quoted him as saying.