EghtesadOnline: Governor of the Central Bank of Iran says a new trade monitoring system is in the offing to complement the Integrated Forex Deals System (known by its Persian acronym Nima).
Nima is a platform where exporters sell their currency earnings to companies importing non-essential goods. It logs data bout repatriated and purchased forex for import and export.
According to Abdolnasser Hemmati, the new system dubbed “Meeting Import Commitment” is linked to an online platform affiliated to the Trade Promotion Organization of Iran and used for registration of all import orders.
The main function of the system is to promote transparency within the entire import process, from foreign currency allocations by the CBI to order registration and customs affairs, he said in an interview with state TV late on Saturday, according to Financial Tribune.
It appears that the new mechanism creates for the CBI and other relevant bodies an efficient monitoring tool to tighten supervision over the entire import process, particularly goods that use subsidized currency (1 USD= 42,000 rials).
The government has often been criticized for not exercising organized and efficient control over forex allocations for importing basic goods and the distribution system.
Admitting to the flaws and failures of the government regarding supervision of the import process, Hemmati blamed the lack of harmony and collaboration between organizations in charge of import and distribution of goods.
To address the issue, he said, the government has decided to merge the two bodies responsible for import and distribution affairs.
The senior banker referred to concerns about the systematic increase in the prices of foods and basic goods. The government, he said, decided to continue subsidizing essential goods to alleviate the people’s concerns about rising prices.
Ali Rabi’e, the government spokesman, said Thursday the government policy to subsidize food imports would continue up until the next fiscal year in March 2020.
Currency Rate Unification
Official reports last week said exporters returned €4.56 billion of their non-oil export earnings back home since the beginning of the current fiscal in March up until June 18.
Hemmati ascribed the increase in the repatriated currency to the shrinking difference of forex rates in the open market and Nima rates.
The difference between two rates has been narrowed since the beginning of the year, which is attractive enough to encourage exporters to offer a bigger portion of their earnings on Nima.
The CBI chief noted that the difference between Nima and open market rates has declined to 20,000 rials, adding that the difference is inevitable due to the manner (hawala and cash) in which the currency is traded in the market.
This is because the forex in Nima is traded via hawala while banknotes are sold in the open market.
“If you transfer a sum from abroad to the seller, it costs between 15%-20%,” he argued, adding that due to the banking obstacles the difference remains unchanged.
Exporters have always strongly protested the legal compulsions that coerce them to sell their forex cheaper at Nima where rates are much lower than open market rates.
Hemmati reflected upon the soon-to-be launched regulated foreign exchange market, speaking of a mid-term program to integrate the new market with Nima.
“We have plans to operate both markets on a single platform.”
The regulated market is designed to organize a wholesale market for trading forex in a transparent environment in which banks and certified exchange shops are the main players.
Hemmati said exporters and importers negotiate forex rates on Nima, dismissing criticism that the Nima rates are prescriptive.
He made a positive evaluation of the performance of non-oil exporters repatriation of export earnings but reiterated that the CBI remains committed and steadfast in implementing the policy of returning home currency earnings from exports.
Warning companies and exporters who fail to play by the rules, he said the CBI sent the names of 150 natural and legal entities to the judiciary who exported more than $4 billion in goods but failed to return the money back to the country.