CBI Committed to Forex Stability

The Central Bank of Iran's governor has declared that the administration has no interest in letting foreign exchange rates climb and that it will take measures to keep the forex market stable.

"CBI is closely monitoring forex market fluctuations and therefore, it would not be wise on the part of investors to opt for the US dollar and away from bank deposits, as the latter would be significantly more profitable," Valiollah Seif was also quoted as saying by Mehr News Agency on the sidelines of the weekly Cabinet meeting on Wednesday.

About a month ago, CBI announced that as of September 2, all banks and credit institutions should refrain from offering interest on deposits higher than the previously decreed 15% while capping their interest on short-term deposits at 10%.              

About a month ago, CBI announced that as of September 2, all banks and credit institutions should refrain from offering interest on deposits higher than the previously decreed 15% while capping their interest on short-term deposits at 10%.

Seif also noted that banks’ deposit rate cuts are being rigidly observed.

“Only a few cases of violation were reported in which the violating branch manager was removed,” he said.

Meanwhile, the USD rate in Tehran’s foreign exchange market has been continually increasing for a couple of months. Rate cuts and the greenback’s rally has tempted a number of investors to consider moving their money to the forex market in the hope of bigger returns.

The CBI governor noted that there is no reason to worry about the greenback’s bull run since during the first six months of the new Iranian year (started March 21), the USD rate against the rial only increased by 2.8% where monthly fluctuations have been less than 5%.

“Forex rates are going through the normal path and no one can predict that investment in the US dollar would be more profitable than bank deposits, as it has been proved that investing in banks is more profitable in the long run than trading the dollar in the market,” he said.

September has been yet another bullish month for the US dollar in Iran’s foreign exchange market.  On Wednesday, the greenback once again gained against the rial to reach its highest value since the beginning of the new Iranian year (started March 21).

According to Tehran Gold and Jewelry Union’s website, the US currency changed hands for 39,250 rials in Tehran’s open market, registering an increase of 120 rials compared with Monday’s close.

The Central Bank of Iran fixed the official greenback rate at 33,420 rials, up 90 rials compared to the day before.

At the onset of summer, the USD rate in Tehran’s open market stood at 37,450 rials while it has gained about 1,800 rials or 5% in fewer than three months.