Markets in Favor of Unified Forex Rates

The unification of foreign exchange rates would help solve many issues in Iran’s economy, said a senior member of the Association of Bureaux de Change Operators of Iran.

Saeid Mojtahedi, who is also the head of the supervisory council of the body, said any measure for promoting transparency in the currency market would boost the demand side.  “It would also prevent speculation in markets,” ILNA quoted Mojtahedi as saying on Saturday.

Iran has been using a dual exchange rate since 2012 when international economic and banking restrictions were tightened over the nuclear program.

Central Bank of Iran Governor Valiollah Seif has pledged to introduce a floating forex regime by the end of the Iranian fiscal year in March 2017.

The single forex regime would help importers and exporters in particular, according to the moneychanger, as “they would be able to make better decisions and come up with more clear plans about the future of their business”.

Mojtahedi added that the recent surge in US dollar rate against rial in the markets is mostly caused by volatility in international forex markets.  The US dollar surpassed 36,000 rials on Monday, marking a multi-month high.

  Setting Rates

The association member noted that he does not expect the unified exchange rates to be lower than the market rate, even though earlier plans aimed for single rates to be lower than the market rate.

Adnan Mousapour, a board member of Iran Chamber of Commerce, Industries, Mines and Agriculture, believes that the market should set the unified forex rates, “rather than the government or the banking system”.

“The forex rates have been [artificially] kept lower [than the open market rate] in recent years, whereas goods’ prices have been surging. This has caused major obstacles for exporters.” he told the Khabar Online website.

The merchant thinks forex rates would be significantly higher than current rates, if there were no pressure for keeping them low.