EghtesadOnline: Foreign exchange trade in the secondary market, known as Nima, declined significantly in three months since the beginning of the current fiscal year (March 20) up to June 13 compared to the similar period last year.
Nima is an online platform affiliated to the Central Bank of Iran where exporters sell their overseas income and local companies buy it for importing goods, machinery, equipment and raw materials.
Currency sold in the secondary market amounted to €2.53 billion during the period, down from €4.38 billion in the same period last year, according to CBI data.
The 73% decline indicates that more exporters failed to repatriate their overseas earnings, reportedly due to spread of the coronavirus that has harmed businesses across the globe.
Importers bought €1.54 billion in foreign currency from the market since the beginning of the year up to June 13 indicating 152% decline compared to last year when the total amount was €3.89 billion.
However, decline in transactions in the secondary market was accompanied by remarkably higher currency rates. A dollar sold for 160,930 rials on average during the reviewed period -- up over the average 113,800 rials, or 44.5%, during the corresponding period last year.
Market observers link the pattern of rising currency rates in the secondary market to the CBI’s new policies calling for less intervention in the market and creating more space for export companies.
Higher forex rates at Nima encourage exporters to repatriate more of their overseas earnings.
Soon after Nima was launched in the spring of 2018, exporters protested the legal government compulsion to sell their forex earnings below the open market rates. CBI obliges them to sell part of their currency on Nima where rates are lower than the open market.
In the past two years businesses leaders have been quoted as saying that it is very difficult to make their foreign partners “understand the concept of conducting foreign trade via Nima.”
One dollar in Tehran’s open market was selling for 179,000 rials on Saturday. With rates at Nima getting ever closer to the open market, exporters have been showing more interest in repatriating their earnings.
Trade conducted via Nima declined due to government restrictions on businesses in the initial weeks of the coronavirus breakout to control the spread of the deadly disease. The other reason was that money exchange bureaus, which are in charge of transferring export earnings back home, were shut. Making matters worse was the closure of almost all border crossings in coordinated efforts with neighboring countries to fight the virus.
Earlier in the week, the head of Export Guarantee Fund of Iran Afrouz Bahrami, pointed to the dire financial conditions of Iranian exporters’ overseas partners due to pandemic, noting that exporters’ difficulties in getting paid by their foreign partners had become a major risk to their business.
“Commercial risks have particularly increased due to the coronavirus spread and falling crude oil prices,” she was quoted as saying.
However, there are some signs that exports to neighbors are resuming gradually as border restrictions are eased.
In the same vein, the CBI Governor Abdolnasser Hemmati had earlier said that “repatriation of export earnings will be back to normal” as export companies get back to business.