Banks told to sell dollars at free rates

A statement on CBI website called on merchants and traders to refer to authorized banks and purchase the required dollars, adding this would channel foreign exchange operations by individuals and entities to banks and reduce their risks, Press TV reported.

The statement added that the banks could also purchase foreign currencies from exporters of non-oil products "at a rate agreed upon by bank and the customer".

This, it emphasized, would be conducted through diplomatic missions that are based in Iran as well as offices of foreign investors and also the branches of foreign banks.

The banks could accordingly sell the foreign currencies thus purchased themselves or through other banks and even authorized exchange dealers, the CBI statement added.

Iran operates two exchange rates, a free market rate, which was around rials 41,300 to the dollar on Sunday and an official rate used for some state transactions, set by the central bank at around rials 32,300, Reuters reported.

In recent months, the CBI has raised the official rate gradually to reduce the gap between the two. It has said it wants to unify the exchange rate, to make the economy more efficient and create a level field for private firms competing with state institutions with access to cheaper foreign exchange, Reuters added.

The CBI further underlined in its statement that it would provide the required dollars to the banks to enable them to meet customers' needs.

However, the media in Tehran are already voicing doubts if this policy would ever work.

An unnamed trader in Tehran currency market said that through the latest policy, the CBI was trying to bring the supply-demand cycle of foreign currencies under its own control.

The ultimate objective, the trader added, was to reduce the role of middlemen in hiking the rates of foreign currencies — particularly the dollar.

"But the truth is that supplying foreign currencies in this form to the market [as devised by the CBI] cannot meet all market demands," the trader said.

"This is due to the red-tape in banks for trading foreign currencies. Therefore, most customers would still prefer to refer to foreign exchange dealers."