EghtesadOnline: A futures currency market aimed at unifying the dual foreign exchange rates will be established in the current fiscal year (March 2017-22), a senior official at the Tehran Chamber of Commerce, Industries, Mines and Agriculture said.
"To unify the foreign exchange rates, regulations and provisions for offering foreign currency in bourse have been devised and were projected to come into force in the previous year (ended March 2017), but were postponed to the current year to exercise caution," Seyyed Hossein Salimi was also reported as saying by the official news website of Iran Chamber of Commerce, Industries, Mines and Agriculture.
As the official outlines, the establishment of futures market will mean that foreign exchange rates will be determined by supply and demand.
"In tandem with the support of Central Bank of Iran, the exchange of state-owned and export currencies in the bourse will kick-start forex rate unification," Financial Tribune quoted him as saying.
Unifying the official and free market currency rates in Iran was one of the main missions of the central bank, which was not accomplished during the first four-year tenure of President Hassan Rouhani. But a few days ago, CBI Governor Valiollah Seif renewed his pledge to unify the rates "early in the new administration".
However, as Salimi notes, forex rate unification will not end rate fluctuations, as the price gap between the official and market rates will be eliminated, but the single rate that remains will not stay the same for long.
That is because the discrepancy between internal and external inflation rates must be implemented in currency rates while "market supply and demand will also play a significant role in deciding the rising or falling trajectory of the foreign exchange rates".
The TCCIMA official elaborated that under the current circumstances where Iranian industries require foreign finance for undertaking investments and renovating their production lines, if they have access to enough currency from non-oil exports or oil sales, prices will remain relatively stable.
Salimi concluded that a supply deficit will send prices on a rising trajectory.