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Iranian CB: fall in exchange rates linked to “ positive expectations ”

By on May 4, 2021 0

The possibility of removing bank sanctions and unlocking billions of foreign exchange assets in foreign banks is the main reason for the sharp decline in currency prices in recent days.
In a press release posted on the website of the Central Bank of Iran, Abdolnasser Hemmati, the boss of the CBI, rejected claims that there were political motives behind the decline in currency prices.
“There are attempts to describe the CBI’s efforts to balance exchange rates and boost the national currency as a political measure,” he said.
Dismissing the allegations, Hemmati said the decline was motivated by “positive expectations” of the lifting of sanctions and the release of Iran’s foreign exchange assets in several countries.
“In light of these expectations, the decline in exchange rates makes sense,” Hemmati said, referring to talks in Vienna between Iran and the signatories to the 2015 nuclear deal officially known as the Plan d joint global action (JCPOA).
Negotiators are trying to revive the deal, which was canceled by former US President Donald Trump in 2018, which reimposed the toughest sanctions in history against the Iranian economy, including on its financial ties with the world.
Currency prices have been on the descending order for the past three weeks as rates have plunged to new lows in the past three days.
Spurred on by lower expectations, the dollar fell on Sunday and lost more than 4.5% or 10,100 rials to reach 219,700 rials on Tehran’s free market. It was the lowest price in three months.
The greenback fell further to 218,000 rials on Monday, posting a decline of 0.8% from a previous session. Iranian markets were closed on Tuesday due to a religious holiday.
Hemmati said the CBI, as the regulator of the currency market, will continue to intervene in the market and attempt to stabilize rates based on the supply and demand mechanism.
Cautious optimism about the progress of nuclear talks has confused most currency traders, causing them to panic sell.
They fear that the rial, which has lost much of its value over the past year, could rebound if the nuclear deal is revived and if banking and financial sanctions are lifted as Tehran has requested and envisaged in the initial agreement.
Besides the political developments, the Persian-language business website Donya-e-Eqtesad pointed to the “lack of strong demand for currency”, especially in the secondary market, known as Nima, as an instrument of the current trend. .
Last week, the CBI said export companies sold $ 4.8 billion worth of hawala forex to Nima in the calendar month ending April 20. Of that amount, only $ 1.3 billion had been purchased, indicating that supply had far exceeded demand.
Nima is the Persian acronym for a CBI-affiliated trading platform through which exporters sell their products abroad and companies buy to import goods, machinery, equipment and raw materials. .