Page 23 - IRANRptJun18

7.0 FX
Iran - FX
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Currency (units per EUR) (eop)
34,092
35,339
34,056
34,859
37,057
39,666
43,273
46,522
Currency (units per USD) (eop)
30,700
31,460
32,375
32,422
32,489
33,805
36,064
37,743
Iran’s central bank allows second relaxation of rial rate against dollar
IMF commends Iran’s move to unify open market and official rial exchange rates
The Central Bank of Iran (CBI) has devalued the Iranian rial (IRR) to 42,110 to the dollar from 42,050, following last week’s first devaluation since the rate was fixed at IRR42,000, it said on its website on May 26.
The CBI shut down the informal foreign exchange market in April to halt a run on the currency, but some money changers have found ways to circumvent the official system.
The decision to slightly relax the rial’s rate once more came as the unofficial ‘back alley’ rates for hard currencies stood at more than IRR63,000 to the dollar, IRR74,310 to the euro and IRR84,870 to the pound sterling, according to Tehran Gold and Jewellers Union data.
The banking authority intervened to halt the dramatic slide in the value of the rial following the resumption of foreign exchange trading after the Persian new year Nowruz holidays. Anxieties over hostility from the US Trump administration and the expectation that Washington would withdraw from the nuclear deal - which it eventually did on May 8 - were a big factor in the devaluation as doubts spread over how resilient Iran's economy might be once under attack again from the US via heavy sanctions. As the jitters spread, the rial dived to as weak as IRR70,000 on the now illegal free market.
Bureaux de change are now banned from trading hard currencies in Iran. Only licensed banks may do so.
The International Monetary Fund (IMF) said on May 2 that Iran’s decision last month to unify the open market and official exchange rates for the Iranian rial (IRR) “is a step that goes in the right direction”.
The unification of the rates “helps to eliminate distortion and improves competitiveness for the economy”, Jihad Azour, director of the IMF’s Middle East and Central Asia department, told Reuters. “This should be coupled with maintaining the fiscal adjustment to reduce the level of budget deficit, reforming the banking system, especially banks who are facing difficulties, and allow the private sector to grow,” Azour added.
"This system is a new opportunity for importers to get their required foreign currency easily and for exporters to offer their proceeds to the market," Iran’s Vice President Eshaq Jahangiri, accompanied by CBI governor Valiollah Seif, was quoted as saying by the Financial Tribune on April 24.
Prior to that move, officials claimed that some $30bn was being held in the accounts of traders, causing market instability. Most open market traders are thought to have halted all work. New stringent rules have been put in place for anyone dealing with hard currencies in the country.
23 IRAN Country Report June 2018 www.intellinews.com