Iranian Rial

[screwball]

 

Akhundi: Contracts with Boeing, Airbus still in force

Iran’s roads and urban development minister rejected the possibility that Donald Trump’s recent stances could lead to cancellation or suspension of Iran’s aircraft purchase contracts.

Abbas Akhundi made the remarks in response to claims made by Western media on possibility of cancellation or suspension of Iran’s agreements with Boeing and Airbus in view of the recent orders issued by the US president, Mehr News Agency reported.

The Iranian official deemed it improbable that Trump’s recent stances could affect aircraft purchase deals with the two giant manufacturers.

Meanwhile, CNN has stated that a bill was introduced in Congress that could curtail the jetliner deals between Airbus and Boeing and Iran.

CNN has also reported that even though America’s recent sanctions against Iran do not cover the agreement with Boeing over purchase of 89 passenger jets, the odds are high for the deal to be cancelled.

Iran Air recently took delivery of the first of 100 jets it has ordered from Airbus while the first of 80 aircraft from Boeing are scheduled to arrive in 2018.

[screwball]

Norway ready to remove banking obstacles to boost trade ties with Iran

Norwegian Finance Minister Siv Jensen in a meeting with Iranian Ambassador to Oslo Mohammad Hassan Habibollahzadeh underlined the need for the removal of banking obstacles hindering the broadening of trade ties between the two countries.

"My ministry is ready to help remove the banking hurdles," Jensen said during the meeting in the Norwegian capital on Tuesday, reported Fars News Agency.

The Iranian ambassador, for his part, underlined the need for signing basic documents between the two countries.

The two sides discussed ways to strengthen economic cooperation between the two countries.

In October, 2016, Norwegian Foreign Minister Borge Brende announced that Oslo has opened a one-billion-dollar credit line to help the Norwegian companies with export of their commodities to Iran.

"About $400 million of that credit line has been used to export the modern technologies to Iran," Brende said in a meeting with Iranian Economy Minister Ali Tayyebnia in Washington.

[WheresmyRV?]

I wouldn't mind travelling to Norway to do my exchange.

[pokerplayer]

1 hour ago, WheresmyRV? said:

I wouldn't mind travelling to Norway to do my exchange.

Me either WRV. Just an FYI a cup of coffee there is $7.50, no refill

pp

[WheresmyRV?]

42 minutes ago, pokerplayer said:

Me either WRV. Just an FYI a cup of coffee there is $7.50, no refill

pp

Wow, I might have to order me a cup of hot chocolate then!

[screwball]

The Money and Capital Markets Commission of Iran Chamber of Commerce, Industries, Mines and Agriculture–known as the country's private-sector Parliament–has published a report on Iran's foreign exchange policies and the effects of those decisions on the business climate. 

The report also outlines the requirements for unifying foreign exchange rates, explicating the optimal way a single exchange rate regime can be adopted, ICCIMA's website reported.  

Deciding the best course for the foreign exchange market has always been one of the biggest concerns of economic policymakers in every country and Iran is no exception. The issue has gained renewed attention in the wake of currency market fluctuations in the final months of 2016, which saw rial sink to record lows against the greenback. 

In its findings, the Money and Capital Markets Commission has floated the idea that a single exchange rate system should be both "managed" and "floating". It also outlines seven factors needed for the single exchange rate regime to move forward.  

Why Unification? 

According to the report, there are many reasons for following a multiple exchange rate regime. 

One main reason could be that using this system helps cover up the negative consequences of ineffective monetary policies.  This includes, for instance, countering runaway domestic inflation through cheap imports, using a lower and subsidized exchange rate. 

The report quotes Dr. Mohammad Jafar Mojarrad, a former deputy governor of Central Bank of Iran, as saying that a multiple exchange rate policy is necessitated by domestic or foreign economic shocks, but is also carried out to support domestic industries and direct resources toward specific economic enterprises.

Mojarrad, however, noted that empirical research has shown that the benign effect of multiple exchange rates over the market lasts only for six to nine months and after that, only their adverse effects are felt in the economy. 

This, he maintains, is mainly due to direct and indirect restrictions on foreign currency allocation and quotas on imports.

"The experience of other countries on the matter also reflects the fact that the multiple exchange rate policy has not been an efficient and sustainable system but it has been used as a stopgap, aiming to eliminate imbalance of payments and also in high-inflation situations," he said.    

Exchange rate regimes are mostly among three groups, namely fixed, multiple and floating. 

Iran had been used a "managed floating" exchange regime twice in the past. The first experience dates back to 1993 when it did not last more than a few months due to economic turmoil and the exchange rate regime went back to multiple rates. 

The second time though, following the experience gained from previous setbacks and reforming forex and trade policies in order to facilitate and deregulate foreign trade, foreign exchange rate unification was successfully implemented and a "managed floating system" was announced in 2002. 

Unfortunately, it only lasted until 2010 when the next administration failed to observe financial and budgetary discipline, and overvalued the rial. 

The Central Bank of Iran's authority as the main money and exchange rate policymaker was stripped and the heavy international sanctions diverted the exchange rate regime from its original path. Eventually, after some severe fluctuations, Iran's exchange rate regime went back to multiple exchange rates.     

Prerequisites 

Currently, Iran has two exchange rates, with market rates varying based on where you are shopping. The official CBI rate is fixed at 32,367 rials and the free market rate is over 38,510 rials, which shows a difference of 18%. 

Now the question is, "What requirements can guarantee the successful implementation of a unified single exchange rate system, with managed float?" 

According to the report, six factors should be observed:

1. Access to sufficient financial resources

2. Curbing the inflation rate

3. Effective management of currency market fluctuations

4. Fiscal discipline of the government and deficit reduction

5. Establishing correspondent banking relations

6. Forming an organized foreign exchange market

The results of global research and studies show that adopting a single exchange rate system, targeting inflation and implementing complementary policies could work since it is reasonable in many ways and make the decision feasible. 

Although using a single exchange rate regime is not probably practical at all times, a managed floating rate allows the economy to achieve its growth targets and control inflation. There is ample evidence that show a multiple exchange rate system or a fixed exchange rate only lead to corruption. 

Non-optimal allocation of financial resources undermines the competitiveness of exports and increases imports, which eventually create many problems for economy, such as severe fluctuations in the currency market.

[screwball]

1. siness And Markets

Wednesday, February 08, 2017

Iranian Gov’t Issues Debts Worth $780m 

 

The government has issued 20 million bonds worth 3 trillion rials (about $780 million) at the over-the-counter Iran Fara Bourse to pay its debts to the Ministry of Education and those accumulated over the public health insurance scheme.

The four-year bonds pay a nominal rate of 20% every six months and are priced at 1 million rials ($26) each, Securities and Exchange News Agency reported.

Two trillion rials ($520 million) of the sukuk (Islamic bonds) were issued by the Ministry of Economic Affairs and Finance in the Ijarah format and 1 trillion rials ($260 million) were issued by the Ministry of Cooperatives, Labor and Social Welfare as Murabaha bonds.

The purchase deadline is Feb. 8 for Ijarah and Feb. 12 for Murabaha bonds. Ijarah sukuk are securities representing the ownership of well-defined assets tied up to a lease contract, the rent for which is the return payable to sukuk holders.

Murabaha sukuk are certificates of equal value issued for financing the purchase of goods based on Murabaha contract. Sukuk holders become the owners of the underlying goods.

[screwball]

Bank Sepah will join the ranks of the few public-sector banks whose capital adequacy ratio meets the minimum standard when the Ministry of Economic Affairs and Finance allocates the approved funds to boost its capital, claimed the bank's CEO.

"With the implementation of the plan to increase the capital of banks, the capital adequacy ratio of Bank Sepah will stand above 10%," Mohammad Kazem Choghazardi was also quoted as saying by Banker.ir.

The chief executive was referring to a decision made by members of the Cabinet regarding increasing the capital of public-sector banks. 

In a session presided over by President Hassan Rouhani in mid-January, the Ministry of Economic Affairs and Finance was obliged to allocate 200 trillion rials ($5.2 billion) of excess funds to increase the government's capital in state-owned banks.

Majlis Research Center earlier published a report late January, declaring that the minimum capital adequacy ratio should be 8%.

The research arm of the Iranian Parliament also announced the capital adequacy ratio of Bank Sepah at 2.46%, which was the second-lowest among the seven public-sector banks mentioned in the report. 

Among these banks, only the Export Development Bank of Iran and Bank of Industry and Mine currently boast a capital adequacy ratio higher than the minimum with 30.86% and 11.90% respectively.

Choghazardi said Bank Sepah has allocated "more than 12 trillion rials ($312.9 million) to small- and medium-sized enterprises in line with the goals of Resistance Economy" principles outlined by the Leader of Islamic revolution Ayatollah Seyyed Ali Khamenei. 

[screwball]

6. Forming an organized foreign exchange market

 

the last thing to do go international!

Edited February 8, 2017 by screwball

[tigergorzow]

1 hour ago, screwball said:

6. Forming an organized foreign exchange market

 

the last thing to do go international!

SB,  Grazie Grazie Milli...Loving this tooooooo mucho...

[pokerplayer]

1 hour ago, tigergorzow said:

SB,  Grazie Grazie Milli...Loving this tooooooo mucho...

 

Hmmmmm, an Italian hiding in tiger clothing 

pp

[tigergorzow]

33 minutes ago, pokerplayer said:

 

Hmmmmm, an Italian hiding in tiger clothing 

pp

Nai..Si...We...Ya...Ka....Love 2 Travel Over The Years...

[screwball]

So I read an interesting article old where it says that Iran 2002 unified their currency and moved to a floating regime I will try and post..also I will post another document which talks about assets back in 2002 and what they have now...

[screwball]

http://www.iran-daily.com/News/156416.html?catid=3&title=156416

[screwball]

Unification of forex rates vital

The Central Bank of Iran (CBI) is intensifying efforts to unify the two-tier foreign exchange rate as part of its market reform policy to streamline the economy.

Currently, the official rate is about 31,000 rials per US dollar against over 35,000 rials on the open market.

The imposition of US-led sanctions during the second term of the previous administration (2009-2013) had thrown the foreign exchange market into disarray. The former government had to introduce a three-tier system to cushion the blow from the crisis. The gap between the first and the third rates climbed to over 300 percent in the dying months of the former government's tenure. This was because the rial had depreciated by 400 percent against hard currencies. Each US dollar was traded up to 40,000 rials during the peak of the forex crisis.

As soon as President Hassan Rouhani assumed office in August 2013, it formulated plans to rebuild the economy through reforms. Since then the CBI, in cooperation with other responsible bodies, has been pursuing plans to unify foreign exchange rates.

Sanctions posed a major obstacle to achieving this goal. However, grounds were prepared for overcoming the hurdles following the implementation in January of the nuclear deal signed in July last year between Iran and the P5+1 — the US, Britain, Russia, China, France and Germany.

Three days ago, the CBI stressed that the unification of forex rates will be vigorously pursued.

Last week, CBI Governor Valiollah Seif also authorized banks to trade in foreign currencies on the basis of open market rates. He said the order is an important step to replace the current two-tier foreign exchange system with a single one.

Seif also vowed that the unification plan will be implemented by the end of the current Iranian year in March 2017.

Officials say economic stability and calm in the market are essential to establish a single forex rate. Hence, they want to accurately assess likely consequences of the move.

 

 

Pros and cons of unified forex system

On the one hand, some experts have voiced concern that the system will be counterproductive. They say the unification of foreign exchange rates will remain elusive and only fuel anxiety in the market.

Such concerns are based on notions that economic and political developments have played a major role in triggering crisis in the forex market.

On the other hand, other economic pundits believe the unification of foreign exchange rates will mitigate the impacts of rent-seeking and will help drive forex dealers out of the market. Such pundits stress that economic transparency is the direct outcome of a unified forex system.

Amid such ideas, the market will determine whether such a system will be productive or counterproductive.

The government has not decided to unify forex rates overnight. It has devised plans for the last three years and weighed the pros and cons of the issue.

The CBI has stressed that the single rate system will be set based on market realities.

It means that the unified forex rate will be subject to fluctuations as in other countries. However, the CBI should monitor the market and adopt comprehensive approaches to forestall any economic upheavals which may plunge the forex market into turmoil.

 

 

Investment, forex market

In the wake of the nuclear agreement with major world powers, many foreign companies have rushed to the Iranian market to either resume or begin trade ties with the Islamic Republic.

Scores of agreements between Iranian companies and their foreign counterparts have so far been signed. Nonetheless, lack of economic transparency is still a major obstacle to boosting trade ties with other countries.

Undoubtedly, foreign investment is essential in helping states boost their economies. Foreign investors regard economic transparency as a prelude to concluding trade deals.

The unification of forex rates plays a crucial role in promoting   economic transparency since this will help investors draw up long-term plans for cooperation with their partners.

Meanwhile, the government should learn from the experiences of other countries which have succeeded in developing their economies. However, a successful economic model may not be useful in other countries.

The administrations can achieve its economic targets by combating economic corruption, preventing rent-seeking, and money-laundering. Apart from economic transparency, effective cooperation of the private sector, economic experts as well as the pursuit of clear and coherent economic policies are also crucial.

 

last year though we would revisit...

[screwball]

https://www.sb24.com/dotAsset/154048a7-28c8-442a-83a2-9e4543940a1b.pdf

In addition, net foreign assets were $10 billion in 2002 (in this year`s successful experience of exchange rate unification occurred) and in September 2015 it was about $61 billion that the amount is about 6 times more than 2002. 

2002 last time when they unified and moved to a floating regime

[screwball]

Rouhani pledges to reverse slide of Iran's currency

 

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A money changer poses for the camera with a U.S hundred dollar bill (R) and the amount being given when converting it into Iranian rials (L), at a currency exchange shop in Tehran's business district, Iran, January 20, 2016. REUTERS/Raheb Homavandi/TIMA

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President Hassan Rouhani sought to reassure Iranians on Sunday that the government would work to protect market stability after the country's currency fell to a record low last week. 

"I am optimistic about the country's economic situation and ... I want to reassure our people that foreign currencies will not keep going up," Rouhani said in a live interview with state television.

Iran's rial hit a record low against the U.S. dollar last Monday in a sign of concern about the country's ability to attract foreign money after U.S. President-elect Donald Trump takes office on Jan. 20.

If the rial's weakness continues, it could become a political issue ahead of Iran's presidential election in May by threatening some of Rouhani's economic achievements. Rouhani, who took office in 2013, is expected to seek re-election but has not announced it officially 

Economists have said Trump's election in November was a major factor in the rial's weakness. He has said he will scrap the deal between Iran and world powers that imposed curbs on Tehran's nuclear projects and lifted sanctions on the Iranian economy last January.

"The dollar has gained against all currencies in the past few months and it is natural if it also gains in Iran. But the rate of exchange of foreign currencies will certainly not remain at current levels," Rouhani said, without giving details of how the government plans to defend the rial.

"The stability of (currency) markets is important for the government. The economy has to be predictable so that exporters and importers can act with trust," he said.

Before Rouhani's remarks, the rial strengthened to about 39,000 to the dollar on the free market on Sunday, after sliding to an all-time low of 41,500 last Monday.

The rial's gains came after central bank Governor Valiollah Seif told state television on Saturday that he saw 36,000 rials per dollar as a "realistic" rate.

Seif was quoted as telling lawmakers that the central bank was injecting $5.8 billion in the market to defend the rial.

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The currency traded at 35,570 in mid-September. Before December, the record low was about 40,000, hit in late 2012, traders said. 

Rouhani's administration stabilized the currency after years of volatility, which helped bring inflation down to single-digit rates from above 40 percent.

Besides the free market exchange rate, Iran uses an official rate, now at 32,375, for some state transactions.

[screwball]

Just now, screwball said:

If the rial's weakness continues, it could become a political issue ahead of Iran's presidential election in May by threatening some of Rouhani's economic achievements. Rouhani, who took office in 2013, is expected to seek re-election but has not announced it officially 

"The dollar has gained against all currencies in the past few months and it is natural if it also gains in Iran. But the rate of exchange of foreign currencies will certainly not remain at current levels," Rouhani said, without giving details of how the government plans to defend the rial.

 

let me guess...

[screwball]

Old but interesting timeframe..

 

 

19 January 2016 17:10

 

CBI: Iran Will Receive More Than $32bn of Unfrozen Assets

  

 

CBI: Iran Will Receive more than $32bn of Unfrozen Assets

The governor of the Central Bank of Iran (CBI) has announced that Tehran will access more than $32 billion of unfrozen assets after sanctions removal.

CBI chief Valiollah Seif said Monday that $28 billion of the assets would go to the central bank and $4 billion will be transferred to the state treasury as the share of the government.

Iranian media reports also quoted Seif as saying that CBI has ordered the transfer of part of Iranian assets from Japan to Germany.

He said the unfreezing of assets after the implementation of Iran’s nuclear agreement with six world powers on Saturday also helped lower the costs of transfer by 10 to 15 percent.

The implementation of the agreement and the lifting of anti-Iran sanctions over its nuclear program was announced after the International Atomic Energy Agency confirmed that the Islamic Republic has remained committed to the nuclear agreement finalized in Vienna, on July 14, 2015, between Tehran and the United States, Britain, Russia, China, France and Germany.

Iran Forex

CBI governor noted Tuesday that a single foreign exchange system will be introduced in the country within six months.

Iran’s national currency, the rial, has been traditionally traded at two rates one being traded by CBI and the other one set by money changers.

The Iranian rial depreciated against the US dollar after the closing days of 2011 when Washington and its allies started imposing anti-Iran sanctions.

SWIFT Banking

Seif also made reference to Iranian banks’ bid to rejoin the Society for Worldwide Interbank Financial Telecommunication (SWIFT), noting that the system has been restored as all the preliminary measures to reconnect to SWIFT were already taken.

He further spoke of the opening of some one thousand LCs (Letters of Credit) at Iranian banks, Press TV reported.

[screwball]

Tehran and Muscat on Tuesday signed a preliminary agreement for a major offshore pipeline project to supply Iranian natural gas to Oman, with top European and Asian companies reportedly in line to implement the project.

The memo, which is an agreement in principle, was signed on the sidelines of a meeting between Oil Minister Bijan Namdar Zanganeh and his Omani counterpart Mohammed bin Hamad al-Rumhi in Tehran, Mehr News Agency reported.

Representatives of French oil and gas giant Total S.A., Royal Dutch Shell, German energy company Uniper SE, Japan's Mitsui and Korea Gas Corporation discussed their plans and vision for the marine gas pipeline on the sidelines of the signing ceremony.

Ali Asghar Hendi, an adviser to Zanganeh, and Saif bin Hamad al-Salmani, director general for planning and projects evaluation at Oman's Oil and Gas Ministry, signed the agreement. The two sides had signed an agreement in late 2015 to conduct feasibility studies on the prospective pipeline.

The subject of the pipeline, which first came to the forefront in 2013, is aimed at supplying gas to the neighboring sultanate through an offshore pipeline for 15 years. 

"The pipeline is estimated to cost $1.2 billion. As agreed, it will circumvent the maritime boundary of the United Arab Emirates" because the emiratis will not allow the pipeline to be laid in their territorial waters, Zanganeh said.

Zanganeh said the decision means the pipeline will be laid on parts of the Sea of Oman which could go deeper than planned. According to al-Rumhi, the pipeline may b laid close to 1,000 meters below the sea's surface instead of the shallower UAE waters at around 300 meters.

The two neighbors hope the pipeline can be commissioned two years after construction work begins. 

------- Final Agreement by Feb.

Zanganeh played down concerns that volatility in the oil/gas market in the past three years could hamper the development of the pipeline and said the project is still viable.

"Construction of the pipeline in deep waters will not affect the dynamics of the pipeline project and the two sides are eager to move ahead," said the minister. "We expect to forge a final agreement by the end of February."

He added that operations to chart out the route of the underwater gas pipeline will be completed in a few months.

The project will be carried out in three phases, namely offshore, onshore and installations.

The pipeline will stretch over 400 kilometers. The onshore part will cover 200 kilometers from Rudan County to the small town of Kuhmobarak both in southern Hormozgan Province. 

The marine section between Iran and Sohar Port in the neighboring sultanate will be 200 kilometers. Reportedly, Iran will be able to use Oman's Qalhat liquefied natural gas (LNG) plant, which has the capacity to liquefy 10.4 million tons of LNG per annum.

"The pipeline will allow us to take part in Oman's LNG projects," Zanganeh said without elaboration.

Iran has been tinkering with plans to build facilities to produce LNG and liquefied petroleum gas (LPG), all to no avail. Converting natural gas into liquid form will make it possible to export the fossil fuel via tankers in a way similar to crude oil exports.

[screwball]

1. Economy
2. Business And Markets

Wednesday, February 08, 2017

Iranian Gov’t Issues Debts Worth $780m 

 

The government has issued 20 million bonds worth 3 trillion rials (about $780 million) at the over-the-counter Iran Fara Bourse to pay its debts to the Ministry of Education and those accumulated over the public health insurance scheme.

The four-year bonds pay a nominal rate of 20% every six months and are priced at 1 million rials ($26) each, Securities and Exchange News Agency reported.

Two trillion rials ($520 million) of the sukuk (Islamic bonds) were issued by the Ministry of Economic Affairs and Finance in the Ijarah format and 1 trillion rials ($260 million) were issued by the Ministry of Cooperatives, Labor and Social Welfare as Murabaha bonds.

The purchase deadline is Feb. 8 for Ijarah and Feb. 12 for Murabaha bonds. Ijarah sukuk are securities representing the ownership of well-defined assets tied up to a lease contract, the rent for which is the return payable to sukuk holders.

Murabaha sukuk are certificates of equal value issued for financing the purchase of goods based on Murabaha contract. Sukuk holders become the owners of the underlying goods.

[screwball]

Summary⎙ Print In Iran, the dollar rate is rising, potentially harming Rouhani and his allies ahead of crucial elections. Can, and will, Rouhani and the Central Bank move in to counter this surge? 

Author Mohammad Ali ShabaniPosted December 4, 2015 

In 2002, Iran introduced a single exchange rate after years of maintaining a multi-tiered currency market, which among other adverse effects facilitated immense revenues for those able to take advantage of the arbitrage. Over the following decade, the Iranian currency maintained relative stability and kept being overvalued, thanks to Central Bank intervention. This system collapsed in 2012, when hard-hitting financial, economic and oil sanctions were imposed by the European Union and the United States. As a result, the multi-tiered exchange market re-emerged. Between 2012 and 2013, the divergence between the official and open market rates reached as high as 300%. This collapse in confidence triggered a rush for foreign exchange, precious metals and property, aided by low rial bank deposit rates amid high inflation.

Read more: http://www.al-monitor.com/pulse/originals/2015/12/dollar-rate-surges-iran-rial-market.html#ixzz4Y5iTMGw4

[screwball]

http://www.imf.org/external/pubs/ft/scr/2002/cr02211.pdf

[screwball]

Read page 4

[gregp]

17 minutes ago, screwball said:

Read page 4

Looked promising back in 2002. I hope they can figure out whats hurting them.