The Central Bank of Iran is required to take measures for regulating the operation of bureaux de change operators by the end of the current Iranian year on March 20, said First Vice President Es’haq Jahangiri.
“The central bank should make it clear what exchange shops are doing. It must also be clear about how buyers use the currency they purchase … The CBI must clarify buyers’ activities as well,” the vice president’s personal website quoted him as saying on Sunday.
“The amount of currency dealt in exchange shops is sometimes surprisingly large. We don’t know where the money is spent or whether they smuggle it out of the country to import contraband.”
Jahangiri also called for taking measures to revive the role of banking system in the forex market.
“Moneychangers started to transfer money overseas due to the restrictions caused by the sanctions against the Iranian banking system,” he said.
“Transferring money through foreign exchange shops is very risky. Now banks should reclaim their role in the market mainly by opening letters of credit.”
Back in July, the banking system got the thumps-up from CBI to trade in foreign currencies at the open market rate.
The Central Bank of Iran recently invited businesses to procure their currency requirements from the banking system at market rates. The proposal was received well and is deemed a prelude to the longstanding plan to unify the dual exchange rate regime in the Iranian market.
Addressing recent fluctuations in the forex market, Jahangiri said traders rush to meet their forex needs when the market is hit by uncertainty.
“In recent weeks, the government was under pressure for making a decision to stop the surge in the US dollar’s exchange rate [against the rial],” he said. “But we decided not to interfere to let the market get back to its normal state.”
The greenback has been rallying for the past few weeks, passing the 40,000-rial to $1 threshold in late December. However, after taking a series of measures by the central bank, including injecting forex resources into the market and arresting illegal moneychangers, the market started to cool down.
The CBI also took strict measures against illegal moneychangers. It announced that “many illegal bureaux de change were identified and a number of them have been fined heavily”.
According to the CBI website, about 400 exchangers have been registered at CBI and received a license.
The rial was quoted in the free market at 38,200 to the dollar on Sunday, according to the website of the Association of Bureaux de Change Operators of Iran.
The first vice president confirmed that Iran has not been successful in attracting foreign finance, “mainly because of its own strictness regarding the terms of finance contracts”.
“Even though it has taken much time to [to be able to] bring foreign capital to the country, we still want to do the task in the right way,” he said.
Jahangiri hoped that more headway would be made in the production sector next year.