Proposal for Setting Forex Rates

The difference between domestic and foreign inflation rates should be used to determine the foreign exchange rates, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture proposed. 

“The most important issue is to set up a strategy that focuses on the difference between domestic and foreign inflation rates as a criterion for determining the exchange rates,” IBENA also quoted Masoud Khansari as saying. 

Stressing that currency rates should not be affected by fluctuations in inflation, Khansari said, “We are forgetful when it comes to domestic inflation and as a result, it piles up for a couple of years and then we decide to react and control the forex rates.” 

Deciding the best course for the foreign exchange market has always been one of the biggest concerns of economic policymakers. 

The issue attracted attention once again in the wake of currency market fluctuations in the closing months of 2016, which saw the rial sink to record lows against the greenback.

Following efforts during the current fiscal year (ending March 20) to close the gap between official and unofficial foreign exchange rates, the government will unify forex rates at some point in the next fiscal year when banking relations with the outside world improves further.