News ID: 210986
Published: 0335 GMT March 03, 2018

Iran minimizing dollar's role in national economy

Iran minimizing dollar's role in national economy

The ban on the use of the US dollar as the foreign currency for registering import orders was the most important event in Iran's trade sector in the past few days. In case the policies are correct and effective, the move can minimize the role of the US dollar in the national economy.

A directive issued by the Central Bank of Iran (CBI) has prohibited Iranian importers from registering orders in the dollar since February 28, 2018. Prior to this, Iranian traders were practically unable to use the dollar for order registration through the banking system, as preliminary US sanctions had led to the elimination of U-turn transactions — allowing transactions with Iran to be cleared in the US dollar by permitting non-US banks to use their correspondent banks in the US – since 2008.

Nevertheless, based on the latest approach by the CBI and the Iranian Ministry of Industry, Mine and Trade, importers will not be able to use the US dollar in transactions even if they purchase the required foreign currency from bureau de change.

The move will not create any problem for Iranian traders in transactions since the dollar's share in Iran's trade basket is not significant, said Mehdi Kasraeipour, CBI's director for foreign exchange regulations and policies affairs.

He added that importers can use other international currencies to make payments or conduct transactions, underlining that there is no reason for using the dollars in transactions.

In the past few days, Iran's foreign currency market witnessed a confrontation between the CBI and the bureau de change. The money changers did not accept the CBI forex rates through its nominated bureau de change and refrained from selling major foreign currencies to customers on the pretext of not possessing the dollar and the euro. In addition, a number of bureau de change refrained from publically announcing forex rates and only tended to purchase the euro.

This led the CBI nominated bureau de change to spent busy days in the past few days as people were compelled to meet their need only through them.

The CBI bureau de change traded each dollar and euro at about 44,000 rials and 54,000 rials respectively, while other money changers had priced the two currencies at 47,000 rials and 57,000 rials, respectively, in their inter-association pricing.

Faced with this situation, Samad Karimi, the head of the CBI's Exports Department, demanded those who sought to purchase major foreign currencies to refrain from meeting their needs through dealers and brokers, announcing that the CBI nominated bureau de change will meet the actual foreign currency demands in proportion to the market conditions.

Licensed bureau de change can purchase daily amounts of $100,000 and €100,000 in cash from their CBI nominated counterparts and sell it to customers.



* The article was first published by IRNA in Persian.

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