Rial will rise as forex center gains steam

(MNA) -- The Iranian rial, which has steeply declined against the dollar over he past week, will gradually rise in value as more transactions are made at Iran’s newly established foreign exchange center, Central Bank of Iran Governor Mahmoud Bahmani said in Tehran on Monday.

The rial fell almost 10 percent on Monday to a record low against the dollar, leaving it with a loss of 25 percent in one week.

The rial was trading at 32,800 against the dollar at 1:30 p.m. local time in Tehran on Monday. On Sunday, it was worth about 29,700, according to the Mehr News Agency.

The forex transaction center is working with a robust backbone of foreign currencies, the Fars News Agency quoted Bahmani as saying.

The center was officially inaugurated on September 24.

The government plans to use revenues from petrochemical sales and 14.5 percent of its oil revenues to provide dollars for the center, Bahmani said.

The center allows importers of goods to buy dollars at a rate 2 percent cheaper than the street rate at any given time, he stated.

The government maintains an official reference rate of 12,260 rials to the dollar, but only a limited amount of foreign exchange is available at this rate.

“With the distribution of currency at this center, the exchange rate in the market will go down because some of the demand (for dollars) will be met at this center and the pressure of demand will be removed,” Bahmani was quoted as saying.

Iran fixed the official rate of the rial at 12,260 to the dollar on January 28, seeking to meet all demand for foreign currencies through banks.

On April 29, Bahmani said that there is no possibility to stabilize forex prices because prices are determined based on supply and demand.

With the modified policy, “people will no longer need to use free markets to access dollars,” the central bank governor added.