Iran relaxes exchange rate rules as US sanctions loom

Mubasher: Iran announced that it will ease foreign exchange rules, in an attempt to put an end to the plunge in the Iranian rial on the back of looming US sanctions against Tehran.

An official body that includes Iranian President Hassan Rouhani, the head of judiciary and parliament partially lifted a ban on the sale of foreign currency at floating rates in exchange shops for purposes such as overseas travel, state run television announced on Sunday.

The decision came after the government in April banned trading currency outside the range of nearly 42,000 Iranian rials against the US dollar.

Exporters would be allowed to pay foreign currency to importers, with no limits on bringing hard currency or gold into Iran.

Moreover, the central bank would open dollar savings accounts for ordinary citizen, in an attempt to foster them to return their foreign currency cash to the country’s economy, the state television said.

Foreign currency would be provided at a subsided rate for purchases of essential goods and medicine, the television said, quoting official statement from the government.

The Iranian rial slid recently, losing half of its value since April, driven by fears on US sanctions which would probably take effect this week.

After US President Donald Trump decided to withdraw from the 2015 nuclear accord with Iran, under which the country agreed to limit its nuclear programme in return for sanction relief, companies and savers ran on the rial, purchasing hard currency to protect themselves from the economic sanctions.

The decision mirrors Iran’s self-confidence as the reinstatement of US sanctions looms, the recently appointed central bank governor Abdolnaser Hemmati stated in a live interview on the television.

“The same day you [the US] impose sanctions we open our economy […] we have no problems, so why should our people worry,” Hemmati said.

“The central bank will try not to interfere in setting the price of hard currencies, which will be determined by supply and demand, however, the bank’s supervision will prevent unbridled [market swings] and the creation of a black market,” he noted.

The US would re-instate as from this week, sanctions against Tehran’s purchases of US dollars, trade in gold and precious metals, and its transactions with coal and industrial software.