Economy, Business And Markets

Stability Foreseen for Forex Market

Stability Foreseen  for Forex Market
Stability Foreseen  for Forex Market

The governor of the central bank anticipated that the currency market will experience relative calm once Iran receives the first $700 million installment of its frozen assets, as part of the 7-month extension of nuclear talks agreed on Monday by the group of negotiators in Vienna.  

Addressing a meeting of provincial governors, bank CEOs, and senior economic authorities of the country held at the Hall of the Ministry of Interior, Valiollah Seif said that the government has adopted effective measures to increase the liquidity by maintaining a negative monetary base.

“The government has no intention of funding its current costs from the resources of the central bank,” Seif said, referring to a practice deemed by critics as a usual habit of the government of former president Mahmoud Ahmadinejad.

Now the government is “sensitive” about the resources of the central bank, according to the CBI deputy governor.

When asked about the recent decision of the Expediency Council over the process of appointing the central bank governor, Seif said the most important factor in determining the autonomy of the central bank is to maintain independence of monetary policy, financial policy, and the budget.

“Once the monetary policy is independently implemented, the central bank’s autonomy would be preserved,” said Seif.

The positive approach of the president and the overall government body is also an effective factor in making the CBI independent, according to Seif.

On the issue of unauthorized institutions, Seif said that the CBI -- as a responsible body for maintaining discipline in the market -- will confront the unauthorized institutions that are operating outside its supervision.

“Although unauthorized institutions promise higher interest rates on deposits, they are in a shaky position,” said the governor, who advised the depositors who put their money in these institutions to be careful about the potential risks, as “the proposed interest rate by these institutions must not be the only factor for choosing one to put the deposits.”

The central bank, however, is closely controlling the performance of the banks and financial institutions that are working under its supervision and will confront any bank that violates its rules.

Answering another question about charging fees on points-of-sales (POS) terminals, Seif said that the bank is preparing a report that will be presented to the Money and Credit Council in the near future.

Regarding possible changes to the interest rates, he said that the CBI’s approach is to avoid determining prescriptive rates.

 “However, the inertest rates will be set in line with inflation,” he added.