Iran to unify multi-tier currency exchange rates

The Iranian administration will set a system of single exchange rate for foreign currencies in the current Iranian calendar year, which began on March 21.

The plan will be a part of market reforms to streamline the state-dominated economy.

The vice president for planning and strategic supervision, Mohammad Baqer Nobakht, said that the administration will certainly implement the plan phase by phase, the Mehr News Agency reported on Friday.

The U.S. dollar free market rate is currently around 30,000 rials in Iran, while the official exchange rate announced by the Central Bank of Iran is 25,440 rials.

Meanwhile, the Iranian president’s economic advisor, Masoud Nili, said in October 2013 that the process of setting a single exchange rate will mean that the official exchange rate will get closer to the free-market exchange rate.

Major economic reforms should be carried out in four sectors of the Iranian economy, the Iranian president’s economic advisor, he added.

Nili further said that the foreign currency market, the cash subsidy payment, the privatization process, and the banking system should be reformed.

Once the four sectors of the economy are reformed, economic activities will go on normally, and then the goal of economic improvement will be realized, he explained.

Iran inaugurated a Forex Center officially on September 24, 2012 under the supervision of the Central Bank to stabilize the depreciating value of its currency, Rial.

With the distribution of currency in this center, the exchange rate in the market will go down, because some of the demand (for dollars) will be met in this center and the pressure of demand will be removed, former Iranian Central Bank Governor Mahmoud Bahmani said at that time.

However, Iranian Central Bank Governor Valiollah Seif said in September 2013 that the U.S. dollar exchange rate in Iran is reasonable and any further fall of the rate will be harmful to the Iranian economy.

The current [free market] exchange rate is reasonable. It is the bottom rate and it will hardly fall further, Seif added.

An optimist point of view in the society has led to a decline in the exchange rate. Any further decline will have negative consequences, he said.

Iran’s exports will decline if the U.S. dollar exchange rate falls below 32,000 rials, a member of Iran’s chamber of commerce, industry, and mine has said.

Avaz Mohammad-Parsa beleives that the dollar exchange rate should be between 32,000-33,000 rials, otherwise exporters will suffer losses.