Economy, Business And Markets

TCCIM Wants Market to Decide Currency Rates

TCCIM Wants Market to Decide Currency RatesTCCIM Wants Market to Decide Currency Rates

Businesses expect the Central Bank of Iran to refrain from interfering in the foreign exchange market and let the market decide the rates, said Masoud Khansari, head of Tehran Chamber of Commerce, Industries Mining.

“Instead of setting rates by fiat, the government and the CBI would do better to manage the fluctuations in the market by drawing on the foreign exchange resources, which is mostly under their control,” TCCIM’s website quoted him as saying on Sunday.

Rates in a single foreign exchange regime should be “based on the supply and demand mechanism in the market. But the supply side should not be manipulated by the CBI.”  

He referred to problems caused by manipulation of forex rates in 2011, like the huge jump in inflation rates and rampant speculation and said, “Unreal forex rates not only fail to improve the country’s export revenues—as the government intends- but it causes considerable harm to the national economy.”

The CBI’s plans for unification of forex rates should include an efficient mechanism to prevent the possibility of losses the various economic sectors may incur, he stressed.

Khansari also noted that there would be need for the so-called forex trade center if a single forex rate regime exists because then “hard currency dealers and the central bank would offer one and the same rate.”

Iran has been using a dual exchange rate system since 2012 when international economic and banking restrictions on the country were tightened due to the dispute over the nuclear program.