Page 20 - bneMag Dec22

20 I Companies & Markets bne December 2022
“The Council of Ministers, in co-ordination with the [Bulgarian National Bank] BNB and other responsible institutions, to accelerate the process of technical preparation for the adoption of the euro according to the National Plan for the introduction of the euro in the Republic of Bulgaria, adopted by the Council of Ministers on May 27, 2022,” says the resolution adopted by the parliament.
Addressing the parliament on October 27, central bank Governor Dimitar Radev said the political decision on joining the eurozone “will have its price, and it will not be small”.
Radev urged MPs to focus on resolving the political crisis and to address questions directly related to preparing for euro adoption, including when Bulgaria will have a budget,
a macroeconomic forecast and a medium-term fiscal programme and with what parameters.
The country was admitted to the eurozone’s waiting room, the ERM II mechanism, in July 2020 along with Croatia. However, political instability has delayed Sofia’s plans for euro adoption.
Bulgaria’s former government, led by Change Continues’ Kiril Petkov, adopted on May 27 a plan for introduction of the euro on January 1, 2024.
When announcing the plan’s approval, then finance minister Assen Vassilev noted that the country had de facto already adopted the euro, as its currency, the Bulgarian lev, is pegged to the European currency.
Iran bans in-person sales of forex as rial dives
bne IntelliNews
The Central Bank of Iran (CBI) has issued a directive banning in-person sales of foreign currencies in bureaux de change, Tehran Bazaar social media channel reported on November 7.
The Iranian rial (IRR) continued to slide against a basket of foreign currencies on the open market, with the USD trading for IRR367,500 by the end of the day, the weakest ever rate of the rial versus the dollar. The euro and pound also hit records of IRR367,050 and IRR421,700, respectively, on November 7, according to currency website Bonbast.
Foreign currency buyers now need to go to website my.ice.ir, register their request for FX and await permission from a CBI official. Only with the permission, can the buyer approach a currency trader.
Traders in Tehran believe the collapse of the rial has some way to go amid economic and political tensions caused by the unrest that has swept Iran in the past seven weeks and the dashing of hopes that talks for a revival of the 2015 nuclear deal, which would bring about the lifting of US sanctions, could soon get back on track.
Local banking magazine Banker on November 6 asked traders if they believed the rial would continue in a downward spiral if the dollar broke IRR362,000.
The consensus was that it would decline further as traders on the market were continuing to load up on USD.
“However, some traders pointed to the central market maker's battle over the dollar price and said that the dollar rate in the market may be revised again today,” the magazine wrote.
www.bne.eu
bne IntelliNews spoke with a currency trader in Tehran.
They said: "Part of the downward pressure on the rial is because of expansive monetary policy whilst the economy is contracting, as in they are printing too much money."
In the current political environment dominated by the street protests, there is increased psychological pressure to flee the rial and convert savings into other assets. In the medium term, this will lead to higher property prices.
The trader added: "The capital controls used by the government will exacerbate the panic and lead to a run on the rial. So what we are seeing is just the beginning of a potential 50% depreciation."
The heavy-handed state approach to FX has been criticised by traders and currency hawkers on Tehran’s Ferdowsi Street, the epicentre of legal and black market currency trading in Iran.
“We hope that with the new currency policies, the tension in the market will subside,” Farshad Taghavi, a trader involved in importing machinery from abroad, said, following the change in rules.
In the Iranian parliament, debates raged over how to handle the rial and FX situation, with all other options mostly exhausted.
Somayeh Mahmoudi, a member of the parliamentary economic commission, said in an interview with Donya Eqtesad newspaper that the state budget would have to update the price of the dollar.
Mahmoudi said: “I do not know what the price of the dollar will be by the time the budget is presented, but the dollar rate in the budget must be updated.”