Household Appliance Prices in Iran Rise; Car Imports Halted

Continuing the effects of the rising dollar price on Iran's economy, media reported a halt in car imports and an increase in household appliance prices. A member of the Electrical Syndicate warned that contractors cannot execute 100 contracts with the Ministry of Energy. The Vice President of the Car Importers Association announced on Sunday, April 21, in an interview with the Fars News Agency that following new currency directives and the transfer of the car import registration system to the Comprehensive Trade System, 'no new orders are being registered.' Farhad Ehtesham Zadeh cited the lack of implementation guidelines as the reason for this situation. He also stated that after the government's resolution to unify the dollar rate at 4200 tomans, 'a massive wave of currency demand for imports has reached the banks, leading to prioritization in currency allocation for imports.' Mr. Ehtesham Zadeh reported that banks have allocated the dollar-to-euro exchange rate for car imports with a conversion factor of 1.2, calculating the dollar rate for car importers at 4850 tomans. His statements come as Iranian President Hassan Rouhani stated on Saturday that the currency needed for producers, importers, and other groups will be provided, assuring them to 'be at ease.' Meanwhile, Es'haq Jahangiri, the First Vice President of Iran, said on Sunday at the Economic Headquarters meeting regarding currency issues that 'necessary measures have been taken to prevent the increase in the prices of essential goods and medicines.' He also announced that the country's integrated currency management system, 'Nima,' will be unveiled on Tuesday. The new government resolution defines the 'Nima' system, which is intended for non-oil exporters to offer their currency in this system, allowing importers to purchase these currencies through banks or authorized exchange offices. On Sunday, the Iranian Customs reported that the number of cars imported into Iran in April decreased by 73% in quantity and 77% in value compared to the same period last year. According to this report, 1,034 cars worth 23 million and 651 thousand dollars were imported into the country in April. In 2017, 70,075 cars worth 1 billion and 838 million and 851 thousand dollars were imported, which represented a decrease of 8.66% in quantity and 8.44% in value compared to 2016. The report did not mention the reasons for the decrease in car imports in April, but the increase in currency prices has previously played a role in the short-term reduction of car imports to Iran. Following the rise in the currency price to six thousand tomans on April 8, the Rouhani government announced directives to reduce currency rates, including declaring that the currency rate above 4200 tomans is 'smuggled,' prohibiting the holding of more than 10,000 euros, and banning direct currency sales by exchange offices. Some analysts have stated that declaring a 'fixed currency rate' and 'security measures,' while they may prevent currency price increases in the short term, will have no long-term effect, just as the currency price continued to rise despite 'security measures in the previous government' or in the last months of the previous year. Among them, Fereydoun Khavand, an economic analyst residing in Paris, told Radio Farda that influencing the currency market with a decree or through security and emergency actions is 'very, very difficult, if not impossible.' Meanwhile, Mohammad Tahhanpour, the head of the Household Appliance Sellers Union, announced in an interview with the Tasnim News Agency that household appliance prices have increased by 7 to 10 percent since the beginning of April. According to Mr. Tahhanpour, due to the increase in currency prices, rising wages for workers, and difficulties in securing raw materials, producers have requested price increases, which have been implemented since the beginning of April. According to this report, household appliance producers had previously requested price increases, but after opposition from the Consumer Protection Organization and an order from the First Vice President, it was decided that prices would not increase until the end of April 2018. The Electrical Syndicate's letter to the Minister of Energy for increasing contract prices. The increase in currency prices has previously had significant impacts on Iran's economy and affected many contractors' contracts with the government. Meanwhile, the Shargh newspaper reported on Sunday that following recent currency fluctuations, members of the Electrical Syndicate have requested an increase in the amounts of previous contracts from the Minister of Energy. Payam Bagheri, a member of the board of directors of the Electrical Industry Syndicate, told the newspaper that due to the sudden increase in currency prices, 100 contracts may not be 'economical' for contractors, and they may not be able to execute them. He warned that 'with the postponement of these projects, the country may experience blackouts.' According to Mr. Bagheri, in 2011, following a sudden increase in currency prices, 250 contracts of electricity industry activists were canceled, and contractors' guarantees were seized. Meanwhile, Hamid Reza Salehi, secretary of the board of directors of the Energy Export Federation, stated that in 2012, with the tripling of currency rates, many projects, even those with 75% physical progress, were halted, and no entity compensated the private sector's losses. Islamic Republic officials have accused foreign countries of contributing to the rise in currency prices in Iran, with Hassan Rouhani's advisor, Hesameddin Ashna, accusing Saudi Arabia of influencing the Iranian currency market through the UAE, Turkey, and the Kurdistan region of Iraq. However, some websites and Telegram channels have reported that the exit of currencies from economic entities affiliated with the Revolutionary Guards from the market is one of the reasons for the dollar's rise. According to experts, reports of the potential exit of the U.S. from the Vienna nuclear agreement have also been cited as one of the reasons for the sudden increase in the dollar price. Donald Trump, the President of the United States, three months ago set a deadline for U.S. European allies to address the 'catastrophic flaws and defects' of the JCPOA, threatening that if the flaws are not addressed, he would no longer be willing to extend the suspension of sanctions against Iran and might exit the nuclear agreement.