Economy, Business And Markets

CBI’s Seif Briefs Majlis Commission

CBI’s Seif Briefs  Majlis Commission CBI’s Seif Briefs  Majlis Commission

Financing small and medium enterprises and unifying foreign exchange rates top the central bank’s agenda for the fiscal year that started in March, the governor of the Central Bank of Iran said in a meeting with members of the outgoing Majlis Economic Commission on Wednesday.

“The CBI will do its best to promote the efficient allocation of existing resources to economic sectors, especially the SMEs,” Seif said.

The newly-elected 280-member legislature will hold its first session on May 28 and is expected to be friendlier and more cooperative with the embattled executive branch compared to the outgoing chamber.

“Even though SMEs account for a small share of the country’s economy, they are potentially capable of generating jobs for the youth,” the CBI website quoted him as saying.

Pointing to the central bank’s plans for unifying forex rates he said, “The dual exchange rate system is a breeding ground for corruption, and we will hopefully unify the forex rates soon.” He did not give a date or details.  Iran reverted to the dual exchange rate system in 2010 when econo ic and banking sanctions hammered the already volatile markets. The rial lost 75% of its value in 2013.

In a speech to the CBI on Tuesday, David Lipton, IMF’s first deputy managing director said Iran’s commitment to exchange rate unification will be critical to entrenching economic stability.

  Forex Rates

“After the unification of forex rates, we need to improve banks’ international engagement to accelerate the process of transferring and using our resources,” the CBI governor added.

Seif also elaborated on the regulator’s measures in stabilizing the forex market in the past two years. “We favor measures that are cost-effective and efficient, and at the same time are grounded in the reality of markets.”

“In the first two years of this government’s term, hard currency rates climbed barely by 3% and 5.2% respectively.” The Rouhani administration took office in mid-2013.

Arsalan Fathipour, chairman of the parliament’s economic commission, called on the CBI to keep up is campaign against violations in the banking system and the informal money market.

Out of 7,000 financial institutions operating across the country, more than 6,000 do not have a license from the CBI but hold a massive 20% share of the money market. The CBI has kept its heat on such institutions but seems unable to get them in line simply due to their close links to powerhouses and vested interests.

Seif pointed to interest rate cuts and said “the rates should be set in way that promote investments and at the same time encourage the people to have savings.”