News ID: 220181
Published: 0302 GMT August 20, 2018

Downstream firms to receive petrochemical feeds based on official dollar rate

Downstream firms to receive petrochemical feeds based on official dollar rate

Ministry of Industry, Mine and Trade plans to provide downstream companies with petrochemical feedstocks on the basis of the official exchange rate for the US dollar which is about 42,000 rials, said the secretary of the Association of Petrochemical Industry Corporations.

Ahmad Mahdavi Abhari told IRNA that the firms will have to sell their final products based on the official rate of the US dollar if they want to receive the petrochemical feedstocks at the same price.

He said the ministry is yet to regulate the mechanisms of the plan.

The official further voiced objection to supplying petrochemical products on Iran Mercantile Exchange (IME) based on the official exchange rate for the US dollar.

He said this will benefit dealers and complicate the process of overseeing trade activities.

Mahdavi Abhari said experts believe that petrochemicals should be traded based on the prices of the secondary market.

Last month, Iran launched a secondary market for foreign exchange to ease a dollar shortage ahead of the return of US sanctions.

The initiative was announced by the Central Bank of Iran to provide foreign currency to importers, who can't access the central bank's preferential rate of about 42,000 rials, which is available for essential goods.

It was aimed at discouraging exporters from selling their dollars on the black market.

Iran's currency started a plunge against the US dollar months ago in anticipation of the US withdrawal from the 2015 nuclear deal in May, and the subsequent reimposition of sanctions on Tehran, which began this month.

Authorities expected the new market would push unlicensed traders to bring their dollars to market, out of fear the secondary exchange's activities will lower prices.

Experts say the black market will continue to influence prices since the secondary market does not meet the foreign currency needs of other segments of the society such as the travelers.

At first, the prices at the secondary market were a little above 8,000 rials to the dollar. But these prices have presently reached the open market levels which are over 100,000 rials to the dollar.

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