Launching integrated forex market in last stages: CBI

July 20, 2019

TEHRAN- Central Bank of Iran (CBI) announced that launching integrated forex market in the country is in the last stages, IRIB reported.

In a statement, the CBI’s office of public relations also denied the news about launching this market on Monday.

While dismissing the news published by some websites about pre-determined rates in this market, the statement also said that discovery of foreign currency exchange rates based on supply and demand is a feature of integrated market.

Some news websites and channels had published that integrated forex market will start operation on Monday with a pre-determined rate.

Establishment of this market has been approved by the Money and Credit Council (MCC), the highest banking policy-making body of the Central Bank of Iran, on January 8 as the CBI aims to explore the real volume of demand and supply in the foreign currency market through a new mechanism.

Regarding this market, a CBI official said on May 5 that the new mechanism aims to organize the transactions in the foreign currency exchange market between the exchange shops.

Forex market in Iran, which had been experiencing many ups and downs after the U.S. withdrew from Iran’s nuclear deal (known as JCPOA) in May 2018, has been recently stabilized, while Iranian currency rial is strengthening.

Economic experts believe that the noticeable drop recently witnessed in the exchange rates (for dollar falling from 130,000 rials to lower than 120,000 rials) has been mainly the result of forex management measures taken by CBI.

That’s true and CBI Governor Abdolnaser Hemmati said on Monday that the value of Iranian rial is recovering against the U.S. dollar as the CBI policies for shielding the currency against the U.S. sanctions are taking effect.

He said the foreign currency exchange market is stabilized.

“Of the CBI’s measures which led to this stabilization in the forex market it could be referred to injecting more foreign currency into the market in a controlled way over the past month which did not led to a sudden drop in the rates, because such drop would again result in rise of the rates”, according to Mehdi Sadeqi Shahedani, an economist.

The economist believes that CBI strengthening its supervision over NIMA has been resulted to injection of more foreign currency to the domestic economy via this system making the forex rate coming down.

In early July 2018, Iran launched Forex Management Integrated System, locally known as NIMA, to allow the exporters of non-oil commodities to sell their foreign currency earnings to importers of consumer products.

The system, which seeks to boost transparency, create competitiveness among exchange shops and a secure environment for traders, was aimed to create the ground for importers to supply their required foreign currency without specific problems and for exporters to re-inject their earned foreign currency to domestic forex market.

Then, when the issue of launching integrated forex market was announced by the CBI, some said that NIMA will stop activity once this market comes to operate, although it was denied by the CBI governor.

On May 25, Abdolnaser Hemmati stressed that NIMA is a pivot of the foreign currency exchange and trade related activities in the country and it will not be omitted from the forex market at all.

While this system will not stop its activity, it has been ordered and emphasized that 50-60 percent of the foreign currency earned from the exports should be presented in NIMA, the CBI governor added.

MA/MA

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