New Forex Directive to Give Banks More Latitude

The Central Bank of Iran will issue a new foreign exchange directive in the foreseeable future in line with its new forex policies, the bank’s governor said.

“Meeting currency demand for the import of goods and services, supplying currency to reimburse installments of foreign exchange loans from the resources of the agent bank and helping customers  obtain foreign exchange loans are among the points addressed by the new directive,” Valiollah Seif was quoted as saying by CBI’s official website. 

According to Seif, the new directive will be issued in the near future. 

“The remittance fee required by brokers for transferring money, return on foreign investment and the credit needed for project finance are among other issues that will be covered in the new directive,” he added.

The official says the central bank is fully ready to make up for the hard currency shortage faced by the banks. 

“The CBI aims to tackle the foreign exchange deficit of the banks and in order for this process to take place, the banks are free to open letters of credit and operate at open market forex rates with CBI support,” he said.

Seif then commented on the recent fluctuations in US dollar parity rate in the Iranian market, saying they have been mostly caused by periodic changes.

“Forex swings take place periodically at this time of the year, as it had in previous years,” he said. “Another major reason for it could be the handling of forex operations related to foreign trade by moneychangers instead of banks–something that emerged during the sanctions era.”

A few days ago, the CBI governor had taken to the social messaging app Telegram to address the issue, saying “as economic facts do not support the recent fluctuations in the currency market, the nature of these swings is not telling of lasting effects”.

On Sunday, the US dollar reached its highest rate against the rial in the past four years and was traded for 39,600 rials before losing some ground later in the day.  

Noting that the banks can now purchase foreign exchange incomes generated from the export of non-oil goods and services from individuals and companies at market rates, Seif expounded on the benefits of CBI’s new directives for the banking network. “The banks will be able to generate good profit by shoring up their forex operations and decrease the operational risk of businesses while making their clients’ payments and forex dealings safer,” he said.

Seif, who is also the head of the Money and Credit Council, emphasized that Iranian banks must immediately move to accelerate their banking services, adding that forex operations done with the aim of improving production and attracting foreign investments can prove “very effective” in realizing the goals set by Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei in the framework of Resistance Economy principles.