Seif: Iran's Lack of Access to Global Markets Delays Currency Unification

Valiollah Seif, the head of Iran's Central Bank, stated on Thursday, May 30, that the lack of progress in establishing active communication between Iran and global financial markets has delayed Tehran's efforts to unify its currency rates. In Iran, there are two currency rates: one official and the other free market. Iranian officials had previously announced their intention to unify these two rates, which was supposed to begin six months after the lifting of international sanctions against Iran's nuclear program in January. In an interview with Reuters on the sidelines of the 'Iran Euro Money' conference in London, Seif said, 'We expected to be able to connect with the global financial market and utilize all available resources and facilities in a reasonable time. Unfortunately, contrary to our expectations, such conditions have not yet occurred.' He added, 'Access to our foreign currency resources and the ability to transfer currency freely at the global level is one of the necessary conditions for unifying the currency rate in the country. We will only start the unification process when we are sure we can guarantee stability in the foreign currency market.' The United States and the European Union lifted most sanctions related to Iran's nuclear program in January this year. However, some other U.S. sanctions against Iran remain in place, and U.S. banks are prohibited from trading directly or indirectly with Iran. This has caused many major European banks to avoid trading with Iran for fear of U.S. penalties. Seif told Reuters, 'Based on the comprehensive nuclear agreement with major powers, we had hoped that Iran's access to the global financial market would be realized by now. We expect this delay to be compensated soon.' He added that the U.S. government has a 'specific role' in this process, and countries cannot selectively implement only parts of the agreement they wish to. When asked which institutions or countries have shown more interest in trading with Iran, Seif stated that the Iranian government is focusing on oil customers and exporters. He mentioned Japan, South Korea, Italy, Austria, and Spain but did not provide further details. 'We believe that we will see better results in the near future.' Reuters notes that due to international sanctions, falling oil prices, and high interest rates, Iran's economic growth rate has been much lower than its potential. However, Seif predicts that Iran's economic growth rate will reach eight percent over the next five years. He also mentioned that Iran is making good progress in reducing inflation, which is currently around 11 percent, and expressed hope that this rate will drop to single digits by the next Persian calendar year in Farvardin. The head of Iran's Central Bank added, 'Given the available resources and the geopolitical position of the country, there is no doubt that Iran can achieve high economic growth rates for a long period. Considering these capacities, it is only necessary to create favorable conditions.'