By Mahnaz Abdi

Integrated forex market to replace NIMA?

July 24, 2019 - 23:27

In early January, Money and Credit Council (MCC), the highest banking policy-making body of Central Bank of Iran (CBI), approved establishment of an integrated forex market as the CBI aims to explore the real volume of demand and supply in the foreign currency market through a new mechanism.

While, this mechanism is planned to organize the transactions in the forex market between the exchange shops, some also say that it may omit other exchange rates, including NIMA rate, gradually.

NIMA (Iran’s Forex Management Integrated System) has been launched in early July 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 on May 25, some news websites published that NIMA will be omitted once the integrated forex market is launched, although CBI governor dismissed those news, saying 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 CBI does not support the idea of omitting NIMA, some are supportive to such approach and say that integrated forex market can replace NIMA.

In an interview conducted by ILNA on Wednesday, Hamidreza Salehi, a member of Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), said that integrated forex market can replace NIMA, because this market will act like a stock market so NIMA’s performance could be transferred to it.

“In this way integrated market can control forex demand and supply”, he noted.

There were previously criticisms about the weaknesses in the performance of NIMA and some also said that integrated forex market can fill the gaps created by NIMA, but now that launching of integrated forex market is seen to occur soon, the idea for omitting NIMA and replacing it with integrated market is being strengthened.

The recent stabilization of forex market and Iranian currency rial strengthening against dollar also supports such idea, because the economists 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.

So, some experts or those active in economic sectors, especially in the private sector, believe that such market stabilization is a good opportunity for moving toward omitting NIMA gradually.

They say that integrated market should delete the other rates in the forex market, because a single-rate system is an advantage toward transparency.

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