Liquidity in Iran Reaches 1,211 Trillion Tomans

The Central Bank of Iran announced in a report that the liquidity figure in the Iranian economy reached over 1,211 trillion tomans by the end of Bahman last year. According to the results of this report published on Sunday, April 20, the liquidity volume at the end of Bahman last year faced a growth of 24.7% compared to the same month in 1394. A comparison of the liquidity volume in Bahman last year with that of Dey of the same year shows that in that one-month period, liquidity in the Iranian economy increased by 15 trillion tomans. According to the Central Bank of Iran's report, approximately 200 trillion tomans were added to the liquidity volume from the beginning of 1395 until the end of Bahman last year, which is a period of 11 months. The liquidity growth rate of over 20% occurs while the inflation rate during these months has decreased. Central Bank officials, including Akbar Komijani, the deputy governor of the bank, explain the simultaneous occurrence of the two phenomena of liquidity growth and inflation rate reduction by referring to changes in the liquidity composition, the increase of quasi-money compared to money, and the increase in the share of bank deposits in the liquidity basket while the cash and coins held by individuals have decreased. According to the Central Bank's report, more than 87% of the 1,211 trillion tomans of liquidity in the Iranian economy, amounting to over 1,058 trillion tomans, is allocated to quasi-money, while about 12.5% consists of actual money. Although the total liquidity figure in Bahman last year has grown, the growth of different components of liquidity has varied, indicating a change in the liquidity composition. The share of quasi-money in the liquidity composition, which is mainly composed of bank deposits, grew by more than 24% in Bahman last year compared to the same month in 94. The monetary base in Dey last year increased by 17.3% compared to Dey 1394, and the multiplier in that month grew by 7.4, with the main growth of the monetary base coming from increased claims of the Central Bank on the government and banks, which could create future problems for the Iranian economy. The increasing liquidity figure occurs while Peyman Ghobani, the economic deputy of the Central Bank, previously emphasized that the bank aims to prevent excessive liquidity growth by strengthening monetary and fiscal discipline and to maintain the government's inflation achievements. He also stated that the Central Bank believes the liquidity growth rate should be reduced. Although the average inflation rate at the end of last year stabilized at 9% and remained in single digits, the point-to-point inflation rate in Esfand last year was 11.9%, which indicates that this increase in point-to-point inflation and the increasing liquidity could pose a serious threat to losing the achievement of single-digit average inflation in the Iranian economy in the coming months.