The Central Bank of Iran has taken measures needed to unify foreign exchange rates the bank intends to implement before the current fiscal year ends in March, said the CBI governor on Wednesday.
Valiollah Seif, however, added that the plan will not be implemented until all the conditions for doing so have been met.
“To unify the forex rates, CBI has begun various procedures and is moving forward according to the circumstances,” Seif, who has travelled to Vienna on the invitation of his Austrian counterpart, was quoted as saying by IBENA.
“However, until CBI is not sure that everything is ready, it will naturally not go forward with the plan,” he said in response to concerns that while some sanctions still persist, rate unification will be meaningless and may serve only to increase forex rates.
Assuring that CBI is in complete control of the situation, Seif reiterated his past pledge that CBI plans to unify the rates by March 2017.
“Since we have the means to execute the plan on schedule, there is no need to worry and businesses can rest assured that economic stability has always been among our most serious goals,” he said.
On Iran’s banking ties with Austria, the official said the National Bank of Austria has reactivated CBI’s account, guaranteeing smooth banking operations.
“Establishing a venue for interacting with the international banking system is among the most crucial objectives of CBI,” he said.
“Austria has been one of the European nations that showed great enthusiasm once the sanctions against Iran were lifted and their banks have been working to restore ties to pre-sanctions levels.”
US Anemic Collaboration
Seif also reacted to recent comments made by US Secretary of Energy Ernest Moniz who had said the US has honored all its commitments under the JCPOA–Iran’s nuclear accord with world powers.
“The US has not lived up to all its commitments and their behavior is not in any way transparent,” he said. “On the one hand, the US claims that the international banks are allowed to work with Iran but also scares them away with the threat [of fines and sanctions].”
The CBI official noted that the US government officials used to travel to different countries, personally threatening them one by one that they would face “harsh penalties” should they choose to work with Iran. Now, he added, they wish to redress the situation with a simple announcement “which not only fails to deliver but at times also backfires”.
In Vienna, Seif also faced questions about interest rate cuts and whether or not Iranian banks favor them or whether more rate cuts are on the cards.
“It is our expectation that the rates will be set based on market conditions. Things were different in the past but now that the economy is operating in a calm atmosphere, current interest rates are acceptable even though there is a discrepancy between them and the inflation rate,” he said.
“There is no plan to further lower the interest rates,” he added.
Seif echoed comments recently made by the head of the Association of Private Banks who had said Iranian banks have no plans to lower interest rates and are lobbying with the regulator to keep the rates steady.
“Lenders are pushing for a freeze on the rate-cutting frenzy that has gripped the markets, asking the government, the Central Bank of Iran and the Money and Credit Council to let the rates proceed in a natural way,” Kourosh Parvizian, added. “No new proposal concerning the reduction in interest rates has been made by bankers.”
The MCC–CBI’s monetary policy committee–lowered the interest rates twice in the past five months, citing the significant drop in inflation as the main reason. Officials close to the decision-making body had hinted that another rate cut could be on the cards in the coming months.
