EghtesadOnline: The Central Bank of Iran said Sunday it injected the rial equivalent of $50 million into the Capital Market Stabilization Fund.
It was deposited on behalf of the National Development Fund of Iran, the sovereign wealth fund, as per a plan to deposit $200 million with the CMSF to lift the stock market, the CBI said in a press release seen on its website.
Provisions of the fund is line with a broader support package approved earlier in the month to stimulate demand in the struggling stock market.
As per one of measure, the NDFI must allocate 1% of its foreign currency resources to the CMSF, a government-affiliated fund created in 2017 to help resolve the credit crunch in the bourse.
Allocating the 1% is envisioned in the articles of associations of the fund but the plan was in limbo for years.
Vice President for Economic Affairs Mohammad Nahavandian last week said the CBI was supposed to sell NDFI’s forex assets worth $200 million within three weeks and pay its rial equivalent to the CMSF.
While the central bank has often expressed reservations about changing the NDFI assets, (which are not always accessible due to the US sanctions) into rials due to its negative impact on the monetary base.
As per procedures, the CBI will pay the rial equivalent of currency withdrawn from the NDFI. This is tantamount to creating fiat money if the money is not accessible to the CBI due to the US economic blockade and severe restrictions on money transfer to and from Iran.
In what is seen as the government’s concerted efforts to rescue the share market, a package of 10 measures was approved earlier in the month.