Banks Allowed to Make Forex Market Foray

In line with the general policy of conducting foreign exchange transactions through the banking system rather than exchange shops and stabilizing the market, the Central Bank of Iran is allowing lenders to purchase the hard currency of exporters at open market exchange rates, CBI’s head of exports department said.

“Non-oil exporters can sell their forex export revenues to the banks, making use of correspondent relations between lenders,” Samad Karimi was also quoted as saying by CBI’s official news website.

“Should the agent banks face a deficit in rial resources, the central bank will move to purchase the forex assets of exporters at open market rates,” he added.

Banks are able to purchase the forex revenues of exporters based on a directive issued by the central bank in early August last year, decreeing that “banks are hereby allowed to purchase forex revenues from non-oil exports of real and legal entities, which enter the country through diplomatic representatives and foreign investors at open market rates”.

The directive also allowed lenders to sell the purchased currency to other banks and bureaux de change.

The goal of the directive is to redirect to the banking system forex operations that were transferred to moneychangers as a result of sanctions that targeted the Iranian financial system.

Another measure in line with this, as elaborated by Karimi, was another edict issued about three months later that allowed the banks to purchase their required currencies from the central bank itself in case they face any deficit.

Based on that directive, lenders were permitted to purchase their forex requirements at unofficial market rates.