Economy, Business And Markets

Iranians Hold $18b in Forex

Iranians Hold $18b in Forex
Iranians Hold $18b in Forex

The total amount of Iranian families’ foreign currencies and gold holdings is estimated at more than five times the central bank’s gold reserves, a report said.

Iranian households currently hold around $3.5 billion worth of gold and $18 billion worth of foreign currencies in their homes, which is five to six times the estimated gold reserves of the Central Bank of Iran, hovering around $3.9 billion, Trend news agency reported.

In July 2013, former CBI governor Mahmoud Bahmani, when he was preparing to pass his post to Valiollah Seif, announced that the bank’s gold reserves were around 108 metric tons. The figure was one fifth of the number announced by him two years earlier.

In September 2010, the country’s annual gold consumption was 30-35 tons which put Iran’s gold reserves at 450 tons. However, a year later Bahmani told IRNA that the CBI gold reserves stood at nearly 500 tons. The CBI put the country’s gold reserves at just 95 tons in 2011, after the last administration. The price of bullion rose to a record $1,870 per ounce in the same year.

The CBI did not publish any report on the country’s foreign currency and gold reserves from 2010 to mid-2013. The Customs Administration of Iran had also stopped publishing reports about gold imports since 2009.

In 2011, the value of the Iranian rial fell by a staggering 70 percent. Prior to 2011 each US dollar sold at 10,000 rials, but the figure soared to around 40,000 rials in 2012. It now lingers around 32,000 rials, according to the unofficial street rate.

 CBI’s Low on Reserves

The CBI has a shortage of foreign exchange reserves due to sanctions by the US and its allies for allegedly funding the country’s nuclear energy program. The sanctions intensified in 2010 and the central bank was kicked out of SWIFT – the international interbank network – effectively cutting it from its overseas’ assets.

According to US officials, more than $100 billion of Iran’s funds are frozen overseas and are hard to access. But after Iran and the P5+1 reached an interim agreement last year, part of the assets, amounting to $7 billion in total, were released to the bank.

Under the joint plan of action that was signed in November and took effect in January, Iran arranged to halt its most nuclear activities in exchange for partial easing of sanctions. The accord was intended to buy time for talks on a long-term comprehensive deal.

The nuclear negotiations are still in process and are to resume on Sept. 18 in New York, moving up to the level of foreign ministers. Reaching a final deal could lead to the release of the rest of the CBI’s frozen assets, bolstering its reserves.