Single Currency Rate in 2017-18 Budget

Iran’s national budget for 2017-18 will be prepared based on unified exchange rates, Masoud Nili, President Hassan Rouhani’s economic advisor said on Tuesday.

“Plans to unify foreign exchange rates are moving ahead. A flexible forex regime is needed, which hopefully will be implemented by the end of the current fiscal year in March 2017,” he was quoted as saying by the khabaronline.ir website, during a meeting with the presiding board of Tehran Chamber of Commerce, Industries and Mines and Agriculture.

Unification of forex rates is considered a crucial requirement for the reintegration of Iran into the global banking system and payment networks. Iran was forced to revert to the controversial double exchange rate regime after nuclear-related sanctions unleashed turmoil in the forex market in 2011-12 in which the national currency lost almost 70% of its value within days.

The Central Bank of Iran has already started plans for launching a single foreign exchange rate regime.

The CBI also has an eye on reducing fluctuations in the foreign exchange market. It has also been working to bring the two rates closer, mainly through lifting the official exchange rates in the past few months.

In a related move, the CBI allowed banks to trade foreign currencies at the market rates. Lenders were also given the permission to attract deposits in hard currency.

Nili noted that Iran experienced 4.4% economic growth during the first quarter of the fiscal year (ending in June 20).

“Stagnation is no longer the main problem of the economy,” he said. “Currently we need to focus on accelerating economic growth as the main challenge confronting the economy.”

“By recognizing growth as the main issue in Iran’s economy, we will direct the government toward taking fundamental measures,” he added. Iran's economy was grappling with chronic negative growth rates when President Hassan Rouhani took office in mid-2013.