Page 39 - IRANRptAug22

Iran’s central bank allows exchange bureau to resume FX trading as part of effort to stabilise rial
A week ago, chairman of the economic commission of the Iranian parliament, Mohammadreza Ebrahimipour, said that the heads of the central banks of Iran and Russia had agreed to abandon the dollar in mutual settlements and transfer all settlements between the countries to their national currencies.
He added that over the past nine months, trade between Iran and Russia exceeded $4bn, with increasing trade in agricultural products between the two countries one trade category that was standing out.
“It is expected that if this path continues, the volume of trade between Iran and Russia will increase by 50% in a short period of time,” the official said.
The Central Bank of Iran (CBI) is permitting licensed exchange offices to resume buying and selling foreign currency, state-run media reported on June 16.
The move comes days after traders in the Tehran Bazaar district protested over the country’s worsening economic situation and the Iranian rial (IRR) dropped to an all-time low against the USD.
All trading by individuals at private exchanges in Iran has been banned since 2018, the year ex-US president Donald Trump reinstated heavy economic sanctions against Iran. The bureaus have been restricted to working only with government-approved importers and exporters.
On June 12, dozens of shop owners in the bazaar district mounted street protests, saying they were incensed by another deterioration in the economy and a recent hike in business taxes. Separately, police arrested 31 currency and gold traders accused of creating “false demand” in the market, state TV reported on the same day.
The new CBI directive on the exchanges is targeted at injecting more hard currency into the market to assist in stabilising the IRR exchange rate. The rial traded at 319,000 to the dollar on June 16, an improvement from the 332,000 experienced on June 12.
Experts believe the directive may help reduce the 15% gap between the government-set rate and the real exchange rate on the market, The Associated Press noted.
The rial traded at 32,000 to the dollar in 2015, the year Iran and major powers signed the 2015 nuclear deal granting Tehran sanctions relief in exchange for curbs on its nuclear programme. Trump rendered the deal inoperable when he reimposed sanctions on Iran and unilaterally pulled the US out of it. Talks to revive the JCPOA with full participation by the US and Iran have become deadlocked. The lack of progress soured market sentiment, hurting the rial.
The Iranian rial (IRR) hit a record free market low of 332,700/$ on June 12 as market sentiment further soured on prospects for the talks aimed at keeping alive the nuclear deal.
The euro and the pound sterling also fell to all-time lows at IRR349,900 and IRR400,000, respectively. The pound broke the 400,000 barrier for the first time in 2022.
At the start of June, the rial was at 318,000/$. When the 2015 nuclear deal, or JCPOA, was signed with world powers, it was trading at 32,000/$.
Gold sovereigns including the Emami and Azadi coins also became more expensive over June 11-12, with both hitting around IRR160mn on the open
Iranian rial sinks to all-time low, unrest sparked in Tehran’s Grand Bazaar district
39 IRAN Country Report August 2022 www.intellinews.com