Iran's Central Bank Stops Currency Injection to Exchange Offices

The Director General of Public Relations at the Central Bank announced that no currency will currently be injected into the exchange market and that "direct sales of currency by exchange offices are currently prohibited." Mohammad Ali Karimi stated this in an interview with the IRIB news agency on Friday, April 24. He added that "based on current guidelines and new regulations, there will be no price other than 4,200 tomans for currency, so currency dealers can sell their currency to banks at this price." Until now, the procedure was that the Central Bank injected currency into the market through selected exchange offices daily or several days a week, and authorized exchangers could receive between 50,000 to 100,000 dollars each time and sell it in the market at a price difference of about 10 to 15 tomans. According to the new currency guidelines of the government, the working method of exchange offices has changed, and they are not allowed to buy and sell currency notes or issue currency remittances. Mohammad Ali Karimi mentioned that the new role of exchange offices is "being redefined" and they may assist in cases where Iranian banks do not have correspondent relationships with foreign banks. The newspaper Qanoon wrote on Saturday about the fate of exchange offices in Iran that "some say that exchangers can only trade coins." The Director General of Public Relations at the Central Bank also stated that the new regulation defines the "Nima" system, which is the integrated currency management system, where non-oil exporters will offer their currency, and importers will buy this currency through banks or authorized exchange offices. Regarding currency prices, Mr. Karimi said: "The price of all goods and real needs of the country that are ordered through the Ministry of Industry and the Comprehensive Trade System and go through the banking route will be 4,200 tomans, and based on the government's decision, we will not have another rate, which includes all travel, student, and medical currencies as well." Following the surge in foreign currency prices in the free market, where the price of each US dollar reached a new record of over 6,000 tomans, the government of Hassan Rouhani announced on Tuesday evening that from now on, the dollar will be offered at a single rate of 4,200 tomans. Meanwhile, the Cabinet approved a directive declaring exchange operations and currency transactions outside the Central Bank's regulations as "smuggling" and considered carrying more than 10,000 euros or its equivalent as a "crime." In recent days, the Tehran police also reported the arrest of 12 individuals labeled as "market disruptors," and Ayatollah Makarem Shirazi called for the execution of "a few key currency dealers." Fereydoun Khavand, an economic analyst residing in Paris, told Radio Farda that influencing the currency market with a command and directive or through emergency and police actions is "very, very difficult, if not impossible." This economist also cited the tense foreign policy of the Islamic Republic of Iran, the jeopardy of the JCPOA, and the possibility of the US exiting this agreement as significant factors affecting the turmoil in the currency market in Iran. Eshaq Jahangiri, the First Vice President, on Thursday pointed to the existence of a "sense of hopelessness" among the Iranian people as one of the factors in the currency crisis, mentioning the JCPOA. Meanwhile, Jalal Mirzaei, a member of the Hope faction in the Islamic Consultative Assembly, also stated on Wednesday regarding the recent crisis that the recent tax regulation of the parliament, which involves examining individuals' financial transactions for higher tax collection, has caused individuals to refrain from bringing part of their assets held abroad back to Iran and to convert part of their domestic savings into dollars and exit the country. Ahmad Alavi, an economist residing in Sweden, in an interview with Radio Farda, deemed the increase in currency rates in the Iranian market as "predictable," stating that since no changes have occurred in the structure of the Iranian economy contrary to the promises of the Central Bank, the same previous and fundamental factors such as inflation, people's rush to the currency market, currency hoarding, and capital flight from the country have led to a continuous increase in currency prices.