Page 18 - IRANRptJul18

5.1.3 Gross international reserves
Iranian travellers take up to $25.7mn out of country for Russia World Cup
Iran’s gold Imami sovereign breaks IRR25mn barrier amid dwindling hard currency supplies
With Iran’s foreign currency reserves remaining under heavy restrictions, World Cup football travellers have taken an estimated $25mn out of the country via the official exchange system, one travel expert was cited by ILNA as saying on June 22.
Iran’s government had little or no choice but to give the officially permitted €500 to each fan headed to the World Cup finals in Russia. But in addition to the official amount, many others sourced dollars, euros and rubles on the black market prior to their departure.
Hormatollah Rafei, chair of the Travel Agents Association of Iran, said 5,000 Iranians travelled to Russia for the football competition, with each due to stay for an average of 10 days. He added that the average cost of their trips was IRR150mn to IRR350mn ($3,600 to $8,300).
"Given the fact that 3,000 people went to Russia, total foreign currency exiting the country would be IRR410bn to IRR1 trillion ($9.7-24m)," Rafie noted. Rafie lamented the loss, saying it would have to be retrieved by inbound tourism. Such tourism is, however, continuing to fall due to the worsening political situation caused largely by the unravelling of the nuclear deal in the face of hostility and sanctions from the US.
Iran’s gold sovereign of choice, the Imami, has again broken the IRR25mn barrier as buyers continue to purchase remaining stocks of the officially minted 18-carat coin, IBENA reported on June 18.
Iranians’ attraction to gold as a safe haven has intensified with hard currency supplies dwindling in Iran following legal changes suddenly brought in in early April to arrest the stark descent of the Iranian rial (IRR), hit by souring sentiment over Iran’s economic prospects in the face of hostility from the US Trump administration. The move banned open market trading of foreign exchange and made unofficial rates illegal.
In early May, a World Gold Council report said that gold coin and bar demand in Iran shot up to a three-year high of 9.3 tonnes in the first quarter as Iranians —correctly—anticipated that the consequences of deteriorating relations with the US would cause Tehran to introduce currency controls.
The Azadi gold coin, the former number one sovereign sold by the Central Bank of Iran (CBI), also reached a historic high on June 18, topping IRR24mn a coin, while smaller half-sovereigns increased in price accordingly.
In the now banned free-floating foreign currency market, the dollar, euro and pound sterling remain stubbornly high against the rial at IRR71,300, 82,400 and 95,600, respectively, according to the banned but accurate bonast.com, which tracks the market. Foreign exchange bureaux have been banned from trading in hard currencies, with only licensed banks permitted to deal and only at the official rate, but the unofficial market has moved to back offices away from the prying eyes of the regulator.
According to the IMF in its Regional Economic Outlook on May 4, the value of Iran’s gross official reserves will reach $108.4bn in 2018. The country’s gross official reserves will experience a $13.3bn jump in the current year rising from last year’s $95.1bn.
18 IRAN Country Report July 2018 www.intellinews.com