News ID: 232471
Published: 0422 GMT October 08, 2018

Forex expert: Iran's membership in FATF to show impact in long term

Forex expert: Iran's membership in FATF to show impact in long term

Although Iran’s membership in the Financial Action Task Force (FATF) would not have a significant and lasting positive impact on Iran's forex market in the short term but it will prove effective in the long run, said the head of the Association of Bureaux de Change Operators of Iran.

A part of the bubble formed in forex prices in the Iranian market is due to the psychological impacts of foreign pressures on Iran, noted Reza Torkashvand at a press briefing on the situation in Iran's foreign exchange market.

He added that passing bills such as the one approved by the Iranian Parliament on Sunday on Combating the Financing of Terrorism (CFT), which is a prerequisite to joining the FATF, is capable of reducing the size of this bubble temporarily.

Following many ups and downs and flip-flops the majority of Iranian lawmakers voted in favor of Iran joining the CFT on Sunday as part of the country's implementation of international standards set by the FATF.

To become law, however, Iran's oversight Guardian Council should vet the bill for compliance with the Constitution.

He said however, this enactment would fail to have a major impact on the domestic market as it will not, in the short term, help facilitate or increase cash inflow to the country or resolve problems besetting money transfer to or from Iran through international banking channels.

Following the passing of the bill by the Iranian Parliament, Iran's foreign currency market reacted to the move and the rial's exchange rate against the dollar experienced a significant reduction with each dollar reaching 118,000 rials from over 130,000 rials. Nevertheless, after a short while, the prices returned to their previous level.

"But gradually and in the long term, [Iran's membership in] the FATF will be effective."

On the second wave of unilateral US sanctions due to begin on November 4, he said they will impact the Iranian forex market but not considerably.

Torkashvand noted that as repeatedly announced by Iranian officials, the US has already, prior to November 4, done whatever it had in mind to put Iran under pressure.

Thus, he added, "The Central Bank of Iran (CBI) is well prepared to resist the sanctions."

Responding to a question on why some of the currency exchange points in Iran refused to buy and sell currency given the CBI's permission, Torkashvand said previously, the CBI played a key role in maintaining stability in the market and managed to meet the market needs almost entirely, he said.

But now, currency exchange points sell the currency they buy, he noted, adding thus, sometimes, it is natural for a foreign exchange point not to have any currency reserves for sale.

Security Key:
Captcha refresh
Page Generated in 0/2487 sec