EghtesadOnline: The Central Bank of Iran hopes it would be able to ease the unprecedented pressure on the currency market after billions in assets are unlocked overseas.
Speaking on the sidelines of a Cabinet meeting on Wednesday, the CBI governor, Abdolnasser Hemmati, referred to talks for releasing Iranian assets long locked in other countries, IRNA reported.
Hemmati was in Baghdad Monday for talks with Iraqi leaders on unlocking $5 billion in Iran’s unpaid energy export bills. The assets have been blocked due to the US economic sanctions.
“It the visit was successful and we are hopeful to use our resources in that country, which is more than $5 billion.”
As per an agreement with the Iraqis, Iran will use the freed assets to import basic goods. The assets are mainly unpaid gas and electricity bills.
Other countries also have responded positively to Tehran’s call to use its currency, the senior banker said. He did not name any country. China, South Korea and India are among the countries where billions in Iranian money remains blocked.
It is estimated that more than $7 billion is held by South Korean banks after the United States imposed unilateral sanctions on Iran in 2018.
“Traders and importers will be informed in which countries we can have access to our assets.”
Hemmati mentioned two main factors behind the currency market fluctuations, namely the ruinous Covid-19 pandemic and the US maximum pressure on Iran’s economy, which “created a negative outlook” among the public.
He said “US pressure will mount in the coming three weeks,” referring to the US presidential election and the embattled Donald Trump’s untiring attempts to further tighten restrictions and appease to his vote bank.
Volatility in the currency market has intensified in recent weeks, especially after the US announced fresh sanctions last Thursday against Iran’s entire financial sector.
In its latest hostile policy, Donald Trump’s treasury department imposed sanctions on 18 Iranian banks aiming to totally cut off the country from the world's financial system and undermine the government’s shrinking revenues.
The Covid Effect
Outbreak of the coronavirus across continents, among other things, disrupted trade between Iran and neighbors and undermined forex revenue from non-oil exporters.
The pandemic forced exporters to delay selling their earnings to the Nima market, the main currency platform where exporters sell forex and importers buy. Chronic shortage of foreign currency is the primary reason behind the spike in Nima rates that has extended deep into the open market.
Exporters blame the US sanctions for failure to return their earnings. The foreign sales’ earnings are estimated in the region of more than $20 billion.
In recent weeks the CBI has tried to increase currency supply to Nima either by directly injecting currency and pushing exporters to expedite the repatriation.
The CBI’s public relation office said exporters sold $180 million to Nima on Wednesday -- 10% higher compared to Tuesday. The CBI hopes more exporters will follow sit in the second half of the fiscal year (Sep- March).
In Tehran’s open market the dollar rose again Wednesday to reach 317,000 rials, up by 1,500 rials or 0.5%. The euro was almost unchanged at 371,790 rials while the UK pound sterling posted a slight increase of 0.2% to reach 410,000 rials.
Selected exchange bureaus, affiliated to the CBI quoted the greenback at 315,000 rials, up 0.62%, according to Tehran Gold and Jewelry Union website.
The CBI said earlier in the week that it is injecting $50 million in in the forex market every day to stabilize rates. The interventions, however, so far had little or no positive effect on the chaotic currency markets. It also raised the ceiling for purchasing foreign currency by exchange shops and banks in the regulated market to half a million dollars a day.