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Cheap Currency Accounts for Bulk of Imports

Cheap Currency Accounts for Bulk of Imports Cheap Currency Accounts for Bulk of Imports

A majority of goods are imported into Iran using foreign currencies at official rates, meaning that those able to engage in imports through this channel rack up significant gains, the deputy head of Energy Commission at the Iran Chamber of Commerce, Industries, Mines and Agriculture said.

“We have two rates for the US dollar, one official rate and one free market rate. Data show that 60% of all imports are done with the official rate while only 40% are done using the market rate,” Reza Padidar also told ISNA.

“Considering the discrepancy between the official and market rates [of USD] that currently stand around 6,000 rials, it is projected that about 160 trillion rials ($3.87 billion) go to those using official rates,” adds the official who is also a member of the board of representatives of ICCIMA.

At the time of going to print, the US dollar was exchanged for 41,860 rials in the free market while the official rate devised by the Central Bank of Iran was 35,909 rials.

This is while in the budget bill of the fiscal 2018-19, which was recently submitted to the parliament by President Hassan Rouhani, the greenback was proposed at 35,000 rials, prompting an uproar of criticism mainly from pundits and private sector figures.

Masoud Khansari, the head of Tehran Chamber of Commerce, Industries, Mines and Agriculture, was among the critics, saying the discrepancy will create a variety of problems for traders and exporters, and called for faster rate unification.

Padidar also backed the unification of the dual foreign exchange rates, saying allotting official rates to some while others have to deal with more expensive market rates is in itself a transparency disrupting factor.

“Transparency must be created in the fiscal 2018-19 annual budget and the way to that transparency is moving toward rate unification,” he said.

 

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