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EghtesadOnline: Foreign exchange rates declined on Thursday, after a week of flurry brought the US dollar close to the psychological level of 140,000 rials the previous day.

According to market reports, the greenback was traded for 133,500 rials but it remains to be seen whether the decline will continue when markets reopen today (Saturday).

However, although the markets are closed on Friday, some news outlets reported the dollar rate had dropped below 130,000 rials, in reaction to FATF's positive outcome for Iran.  

In an Instagram post on Thursday, Abdolnaser Hemmati, governor of the Central Bank of Iran, ascribed the recent volatility to easing of import rules for border residents and sailors by the government and asked the decision to be revoked immediately, Financial Tribune reported.

"In the climate of sanctions and forex restrictions, such decisions will increase the import of unnecessary goods," Hemmati wrote. He added that the government decision has stoked demand for currency in places such as Sulaymaniyah (in Iraqi Kurdistan), Dubai, Herat and by extension in Iran. 

Since taking office last July, Hemmati has tried to calm the currency market mainly by curbing demand, ignoring warnings by some that the move could backfire and trigger an economic recession. 

CBI issued a directive in December telling banks and credit institutions to abide by the restrictions the regulator set on the ceiling of payment transactions. 

The directive allows a maximum of 500 million rials transaction for a single debit card and up to 1 billion rials for any national ID number daily.  In other words, each card holder is allowed to purchase maximum 1 billion rials via POS devices with their debt cards. 

Akbar Komijani, a CBI deputy, said earlier this month that the restrictions were successful in curbing speculation in the forex market. 

Despite the efforts, however, the USD exchange rate recorded a 30% increase in the open market in two months to Feb.19, according to the economist Ehsan Soltani. 

Hemmati said FATF's Friday ruling would be in Iran’s favor which would affect the market in positive way–a forecast that came true. 

According to a CBI statement, during the three days to Feb.20, more than €275 million was sold by exporters and the CBI on the online forex deals platform Nima. According to the CBI, 60% of the sold currency has been offered by non-oil exporters.

The CBI has announced special incentives for exporters who promptly repatriate their currency earnings on Nima–whose rates are lower than the free market. 

 

Iran Tehran US dollar foreign exchange rates currency market