Currency Market Under Control

The rate of the US dollar to the rial is unlikely to reach 38,000 rials, said Hamid Zaman Zadeh, director of research department at Banking and Monetary Institute, affiliated to the Central Bank of Iran.

“Currently, the market is not in a crisis and no volatility is predicated. Donald Trump’s victory in the US presidential election lead to increased uncertainty in the market. Concerns will gradually fade away if the upcoming US government does not act on major policy changes (as promised during Trump’s campaign),” Fars News Agency quoted him as saying on Thursday.

His comments come after the recent rally in US dollar and other major currencies in the Iranian market.

The greenback sold for 37,430 rials on Thursday. The currency has gained 1,320 rials during the past 30 days. It fetched 36,110 rials on October 25.

Euro was sold for 40,350 rials on Thursday, having increased by 790 rials during the past 30 days. The British pound gained 2,580 rials during the one-month period and sold for 47,090 rials on Thursday.

 Businesses Worry  

Businesses are concerned about possible hindrances in the implementation of CBI plans for launching a single forex rate regime by the end of the current fiscal year in March 2017.

Mohammad Lahouti, a board member of Tehran Chamber of Commerce, Industries, Mining and Agriculture, said he “wonders why the CBI has not yet unified foreign exchange rates, which he called “the private sector’s main concern.”

“Lack of sufficient resources [probably] is the main cause of delays in the implementation of the plan,” TCCIM news website quoted him as saying.

“The CBI is also obliged to control heavy fluctuations in forex market, according to the Fifth Five-Year Economic Development Plan,” he added.

Addressing similar concerns, Zaman Zadeh said the CBI will keep increasing the official exchange rate, in line with plans for the unification of forex rates.

The central bank is working to bring the official and market rates closer, mainly through gradually raising the official exchange rates over the past few months. Official rate for the dollar was 32,095 rials on Thursday.

Currently, there is a 15% difference between the official and market  rates, according to the official. “There used to be a 50% difference between the two rates.”

“A unified rate for the US currency would probably be lower than 37,000 rials,” he said, “unification of the forex rates will increase supply in market, which by extension would lower the rates.”

Zaman Zadeh referred to the surge in Iran’s oil revenues [in the wake of sanctions relief] and income from non-oil exports and said Iran has sufficient resources needed for the unification of currency rates.”

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.