Iran Forex Market Fluctuations Normal

Central Bank of Iran's vice governor said the country's forex situation is currently very strong and believes that fluctuations in foreign exchange rates in Iran's market are normal.

"The rise and fall of foreign exchange rates might hover around 7-8% in short periods of time, but the fluctuations are totally normal when assessed for the whole year," Akbar Komijani was also quoted as saying by IBENA.

He noted that currently, there are no impediments to bringing revenues inside the country so the market fluctuations are not related to this matter at all.

"Last January, due to seasonal reasons, the domestic foreign exchange market experienced significant fluctuations and we elaborated on the reasons too," he said.

The official explained that the new US administration had just started its tenure at the time and "their positioning against Iran's nuclear policies affected the US dollar's rates in Tehran's market".

But the CBI managed the situation very well to pass that stage and currently, the market is in a very stable state, he added.

Chinese and Other Issues

Asked about the closure of Iranians bank accounts in China, the CBI official outlined the reasons behind the incident.

"When we heard about the problem, CBI sent a delegation to China to discuss the matter with Chinese officials and resolve the issue and as far as we could find out, Chinese banks are adopting a new system for letters of credit that troubled a number of Iranian traders. However, now everything has been resolved and there are no more account closures," Komijani said.

In early August, a number of media outlets published reports that Iranian traders are facing en masse account closures, prompting a late night TV show to conduct interviews with several Iranian citizens in China who claimed their accounts with three lenders, namely Agricultural Bank of China, Industrial and Commercial Bank of China and China Merchants Bank, have been closed.

However, the then Iranian minister of economic affairs and finance, Ali Tayyebnia, denied the matter, noting that "bank accounts of traders and businessmen have not been blocked in China", rather a system has been set up in the country to regulate foreign trade ties among banking, customs and currency systems, which has led to changes in Iran-China business relations.

Komijani was asked if China prefers to export its commodities to Iran instead of using cash to settle its debts, to which he responded, "every country tries to sell its products to other countries and that is normal, but we would like these transactions to be bilateral".

He added that in order to increase the volume of trade with other countries, exchanging commodities is sometimes necessary.  

The volume of Iran's foreign debts is considerably low compared to the country's gross domestic production, which means other countries are not willing to grant loans to Iranian projects.

CBI's vice governor noted that as the trade volume with other countries is getting bigger, foreign investments in the country are increasing in tandem.

"As we are eager to absorb foreign resources, we should be careful with the amount of foreign debts since that can create a lot of problems in case of a financial crisis," Komijani concluded.