Economy, Business And Markets

Greenback Will Pull Back

Greenback Will Pull BackGreenback Will Pull Back

The deputy governor of the Central Bank of Iran (CBI) has predicted that the greenback will weaken versus the rial.

“The central bank wants exchange rates to be guided logically and towards what the market wants,” Akbar Komijani said on Tuesday about the bank’s policy about foreign exchange rates.

The dollar’s exchange rate is influenced by both fundamental changes in the economy and temporary short term variables, he said. “The central bank will counter short term factors and frenzied behavior that increase exchange rate volatility and upset order and stability.”

“We hope” that the dollar’s exchange rate will “stabilize and move downward,” the deputy told reporters when he was asked if the dollar would stay above the 35,000 rial mark.

He also said, “We should take fundamental economic factors into account,” when questioned on the central bank’s efforts to unify the foreign exchange regime.

Currently Iran has a multiple exchange rate system. The price of official rate for the dollar at 27,314 rials and its market rate at 34,570 rials on Tuesday, leaving a 26.5 percent gap in between.

The stability of Iran’s international relations and the outcome of negotiations over Iran’s nuclear energy program are major issues in determining CBI’s power to unify the feign exchange regime.

CBI’s frozen overseas assets – worth $100 billion according to US officials – could be released, if sanctions against the institution are eased. The bank is under severe sanctions for allegedly financing Iran’s nuclear energy program.

The government is currently negotiating with the P5+1 – the five permanent members of the UN Security Council plus Germany – to lift sanctions placed against it by addressing international concerns about its nuclear program, which Tehran has proved, is strictly peaceful.