EghtesadOnline: The regulated foreign exchange market can and should help in stabilizing foreign exchange rates and in the process eliminate rent-seeking and corruption because trade will be conducted in an open and transparent environment.
Head of the Majlis Economic Commission Mohammadreza Pourebrahimi says the market can also be an attractive venue for exporters to repatriate their foreign currency.
He blamed the lower forex rates offered on Nima (Integrated Forex Deals System) on exporters’ reluctance to repatriate their earnings in the last fiscal (March 2018-19), according to Financial Tribune.
Resorting to several bylaws, [the Central Bank of Iran] tried (but was unable) to persuade exporters to return their currency earnings to the country, IRNA quoted him as saying.
“But rates that will be quoted in the regulated market would be attractive enough to encourage exporters return their earnings.”
Nima is a system developed by the CBI as a venue where companies sell their export earnings at rates lower than the open market.
Lower currency rates in Nima have tempted most exporters not to repatriate their earnings to the CBI-controlled system.
The new market is expected to be attractive enough for exporters to encourage them sell their forex earnings in the market, which in turn help curb currency rates over time and bridge the gap between the regulated market rates and Nima rates.
It will strive to create and organize a transparent market where foreign currency will be traded in cash via an electronic platform.
The market will be launched with the participation of banks and certified exchange shops under CBI oversight. It is said that the deals within the regulated market will be processed according to an “order driven” mechanism.
Pourebrahimi pointed to a recent CBI directive that allows exporters to sell part of their currency earnings in to money changers, adding that after launching the regulated market exporters can quote their desired rates at the exchange bureaus within the market.
The market will deal in wholesale currency in banknotes with exchange bureaus and banks. Retail forex trade will be conducted in offices outside the purview of the regulated market.
Rules for launching the first-ever forex market in Iran were approved in January by the Money and Credit Council - a top financial decision-making body headed by the CBI boss.
Despite the previous timeline for the regulated forex market to commence work by mid-May, the market has not yet started work.
Economy Minister Farhad Dejpasand said Monday that the regulator has completed all the formalities for launching the market and the company has been registered.