CBI View of Freed Assets
Economy, Business And Markets

CBI View of Freed Assets

The Central Bank of Iran will utilize its foreign assets to stabilize the foreign exchange market, expand exports and create new jobs, Valiollah Seif, the bank's governor said late Saturday. Easing of the international sanctions will have a "sustainable positive impact" on the volatile currency market, he told state-run TV in a live program.
"Easing of sanctions would allow us to access $32.6 billion in foreign assets. Of the sum total, $28.1 billion belongs to the CBI while $4.5 billion goes to the government," he said.
The senior banker noted that the regulating body supports a stable foreign currency market and is responsible for "monitoring and directing the market."
He said with the expansion of non-oil exports, the CBI's role as the biggest supplier of hard currency "has been undermined and now there are many competitors in the market."
Forex rates went through wild gyrations in the past few weeks with the US dollar crossing the psychological 37,000-rial barrier for the first time in a year. Seif had recently said his bank CBI will try to empower the rial once it gains access to frozen assets. In response to the market optimism over the implementation phase of the nuclear deal with global powers, the rial bounced back and gained 1.3% against the greenback.  
"Implementation of the nuclear accord clears the way for unifying forex rates. But we need about six months before we go ahead with the decision," Seif said pointing to the possibility of a single rate as one of the outcomes of lifting the crippling economic/banking embargo.
Iran had to revert to a dual exchange rate regime after banking sanctions against the county culminated in 2012.  
Iran's banking sector will be reconnected to the international interbank messaging system SWIFT within the next ten days, Seif said. The regulator is determined to help Iranian bankers "update standards and regulations" in order to prepare them for reentering the global banking system.
"The decade-plus sanctions imposed on Iran's economy deprived the banking industry from the international sphere. Lack of interaction with their foreign peers and outdated laws kept back Iranian lenders."
Tehran's monetary and banking laws allow foreign firms and banks to open branches in Iran, establish joint banks with local lenders or buy shares in Iranian banks, according to Seif. "Some European countries and regional lenders have submitted their requests in this regard," he said without elaboration.
 Hamid Tehranfar, the bank's vice governor for supervision affairs had said earlier this month that CBI was planning to send a bill to Parliament proposing an increase in the stakes foreign companies and banks can hold in joint banks.
Seif said lifting of the sanctions will lead to sweeping reforms in the domestic banking industry. The banking sector needs a complete and thorough overhaul, he told the late night viewers.
 "We are trying hard to mobilize the banking sector's potential to foster economic growth and support the economy. The CBI is considering creating new markets, absorbing foreign direct investment and access to modern technology as its priorities.
 Credit Line Guidelines
Following the lifting of the sanctions, the CBI issued a set of guidelines, clarifying rules for banks on opening credit lines.
According to the directive, Bank Muscat and Eihbank –a German-based lender affiliated to the Bank of Industry and Mine – can be used either as the advising bank, the issuing bank or the reimbursing bank.
Transactions for imports worth less than €500,000 could be done with bills of exchange, whereas higher value deals will require credit lines.
Trade with Bank Muscat would be possible in euro, Swiss franc, Japanese yen and the Omani rial. Credit lines in euro can be used in Eihbank as well.
Euro certificates verified by China's Kunlun Bank can be used for import from any country except China and could be approved by Bank Muscat and Eihbank.
To help empower Iranian banks' credit for forex activities the CBI will also grant domestic lenders deposits in foreign exchange for a 3-month period based on Libor interest rates. The amount of deposits granted to each lender will be based on the volume of its foreign exchange activities. Domestic banks are not allowed to use the deposits to loans in hard currency.

Short URL : http://goo.gl/SkJSwR
  1. http://goo.gl/ot1U4K
  • http://goo.gl/H4ojac
  • http://goo.gl/v65JR6
  • http://goo.gl/JvuWd9
  • http://goo.gl/l9e3uV

You can also read ...

Apple Moves to Store iCloud Keys in China
When Apple Inc begins hosting Chinese users’ iCloud accounts...
Continued Action to Improve the Situation With FATF
Following the Financial Action Task Force’s latest decision,...
Iran-Denmark Trade Tops 11% in 2017
Iran exported close to €10 million worth of commodities to...
Business Delegation to Visit Albania, Macedonia
An Iranian business delegation led by Chairman of Iran Chamber...
IME Trade Value at  All-Time High
Trade value at Iran Mercantile Exchange hit 1.03 quadrillion...
Total residential deals registered during the 11 months to Feb. 19 equaled 168,933, which indicate an increase of 12.8% compared with the same period last year.
The total number of housing deals in Tehran reached 18,400...
Iranian Knowledge-Based Firm to Produce Anesthesia Machines
A knowledge-based company located in Pardis Technology Park...
Decoding Iran’s High Savings Trend
In a sample of 25-odd developing countries that make up...