Page 33 - IRANRptOct19

new sanctions regime, has intervened in the hard currency markets. That has helped Iran recoup towards two-fifths of the losses made by the IRR against the dollar in the year to date. The currency stands at around 60% weaker than it was at the start of 2018.
Mohammad Reza Pour-Ebrahimi, chairman of the Iranian parliament’s economic commission, said the economy ministry planned to create its anti-sanctions 'war room' in the next few weeks, along with banking officials.
“The formation of the anti-sanctions management room in the economy ministry aimed at monitoring the Americans’ measures in the banking sector and our moves to strengthen our banking system was discussed at a meeting,” he said.
He said he could not give more details due to the sensitivity of the issue over which a gag order has been placed.
8.1.1 ​Liquidity / assets
Iran’s liquidity expands to IRR18.82 quadrillion in Persian fiscal year ending March 2019
The Central Bank of Iran (CBI) has reported on July 8 rial liquidity grew 23.1% to reach IRR18.82 quadrillion (around $447bn) in the previous Persian calendar year (to March 20).
Liquidity continues to grow due to the devaluation of the rial against a basket of other currencies. With prices continuing to creep upwards, the pace of growth is likely to be higher than the CBI’s official statistics.
The share of M2 money stood at in March at IRR2.85bn (more than $67.6bn) “Quasi money” – money sitting in bank savings accounts – stood at IRR15.97 quadrillion (above $379bn) registering a growth of 19.6% y/y.
8.1.2 ​Loans
CBI pushing for loan-friendly banking
Interest rates on Iranian bank loans were lowered in line with the Rouhani administration’s plan to switch the banking system from savings-based to loan-friendly.
Peyman Ghorbani, CBI Vice Governor for Economic Affairs, said that commercial loans must be set from 18 to 19% from September 2. Loans were locked at 20% and above before the proposal to cut rates.
As it is, the banks are struggling with the current rates forced on them by the CBI as their business plans were previously based on high-interest savings accounts.
The lowering of interest rates was also set to come into direct conflict with the upgraded capital adequacy ratio outlined by the CBI. Banks that did not meet the ratio were at risk of losing their licence, the central bank said.
8.1.3 ​Deposits
Saving rates fall to 15%
Deposit rates on Iranian bank accounts were lowered to 15% with daily short-term interest rates fixed at 10% since last September in accordance with the plan set out by the CBI, ​Banker.ir reported.
During the past decade, interest rates have historically been above 20% with some credit institutions in Iran offering over 30% for savers. The average loan rate at its highest was 33% in 2009.
33​ IRAN Country Report​ October 2019 www.intellinews.com