The Central Bank of Iran announced on Wednesday that foreign exchange resources and expenditures are under full control and the banking system is prepared to meet all the hard currency needs of the country.

CBI issued the statement in the wake of the much-criticized unilateral decision by US President Donald Trump on Wednesday to exit the deal Iran signed with six world powers in 2015.

“The Central Bank of the Islamic Republic of Iran, having predicted America’s unreliability in the past, had thought out strategies to counter the US violation of JCPOA and some of these measures have been taken and implemented in this regard,” the statement published on CBI’s website said.

The Joint Comprehensive Plan of Action is the formal name of the deal based on which Iran curbed nuclear activities in return for the lifting of sanctions imposed by the UN, the US and EU.

On Tuesday and ahead of Trump’s announcement, CBI  Governor Valiollah Seifhad said the US decision regarding Iran’s nuclear deal, whatever that may be, will not cause any disruption in the country’s economy.

Seif also said that at the core of recent decisions taken by the government regarding the foreign exchange market has been the immunization of the economy from “enemies’ propaganda”, particularly those unleashed by the US and its allies.

Calling the deal “decaying and rotten” during his Tuesday speech, Trump went against advice from European allies and said he would reimpose economic sanctions that were waived when the deal was signed in 2015.

In response, Iran said it was preparing to restart uranium enrichment. Iran’s President Hassan Rouhani said: “The US has announced that it doesn’t respect its commitments.

“I have ordered the Atomic Energy Organization of Iran to be ready for action if needed, so that if necessary, we can resume our enrichment on an industrial level without any limitations.”

CBI in its statement assured all businesspeople that the US violation of JCPOA would not cause a halt in the provision of hard currency for all needs.

The government decided to unify the dollar’s exchange rate at 42,000 rials on April 9 in the wake of a sharp slide in the value of rial.

According to the measures, the US dollar for all purposes, including imports, travel, overseas students and research projects, will be offered by the government at the exchange rate of 42,000 rials.

The announcement was later followed by several other measures approved by the Cabinet and subsequently notified by CBI.

It was decided, among other measures, that travel currency would be allocated only up to €1,000 or its equivalent in other currency once per year and €500 for trips made to a neighboring or allied country.

The central bank has also launched the Integrated Foreign Currency System (locally known as Nima) to track all forex transactions that involve banks, exchange houses, importers and exporters.

No Volatility 

Reports from the open currency market on Wednesday claimed the exchange rate was falling. CBI fixed the exchange rate of 25 currencies at rates lower than on the previous day: euro was fixed at 49,790 rials.

The benchmark Bahar Azadi gold coin lost ground after an initial rally and fetched 19.93 million rails ($474), according to Tehran Gold and Jewelry Union’s website.

Tehran Stock Exchange’s main index TEDPIX also gained 85 points in reaction to the news that Iran would continue to stick to the deal with European signatories that are determined to preserve the deal.

Government Spokesman Mohammad Baqer Nobakht also sought to assure markets on Wednesday, saying that the country’s forex position is good.

Nobakht referred to the latest figures of the International Monetary Fund, which indicated that Iran’s forex reserves had climbed to $108 billion from $95 billion.

In an interview with IBENA, Mehdi Taqavi, an analyst, said US actions against JCPOA would cause no shock in the currency market, in view of the government’s moves to replace the dollar with euro. He predicted that euro would soon become the major currency of choice in Iran.

Source:

2018, Iran, CBI: Forex Situation Stable Despite US JCPOA Pullout, Thursday, May 10, p.1,<https://financialtribune.com>