Iranian Rial

[blueskyline]

1 hour ago, millionaire in training said:

 I think that Iraq will come out at 1-1 (as per articles that have said that ) and will start to float . I believe that we will see this start to happen in the coming weeks towards end off year . And I do feel that we will see this happen this year 2016.

Im not sure about Iran. I can see their motivation and progress ......and I agree they won't want to be left behind. Im hoping that they can start off strong and float to their potential rate. I know that I won't be touching it until it reaches at least 1-1. And even then I'll re-evaluate the situation .What would be the point in cashing out before that.  This is why I've also invested in the VND.  I don't have high hopes for it to pay off as well as the dinar/rial. So that one I won't hold on to for the long haul. That will be my "mad money".

Remember folks be smart about cashing out. You're not going to get a second chance to do this again. The potential for growth is unbelievable. You don't want to be sorry that you cashed out too soon when you could of doubled your investment.

 

I've researched as much as I could of these other countries we were told to in vest in. I believe no one is showing their true wealth of assets yet but that day will come . We might very well be highly surprised at what they hold in the ground or in the sky as far as days of sunlight for future energy. This is all very exciting .

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Ayear after the Iran nuclear deal came into force, questions have been raised about the outcome of the deal for Iran’s economy.

In the wake of the Joint Comprehensive Plan of Action with world powers, as the deal is known, a fierce debate between rival Iranian factions is developing over people’s economic expectations of the deal as Iran gears up for the 2017 presidential election, reads an article published by online news portal Middle East Eye.

Excerpts of the article follow:

On the one hand, government officials, who finalized the negotiations, are presenting a positive image of the current economic situation to portray the JCPOA as an achievement.

The other side believes that by signing the nuclear deal, Iran gave up its nuclear achievements while the expected improvement in the economic situation has not been achieved.

The reality is that JCPOA, by lifting most of the sanctions imposed against Iran over its nuclear policy, has returned Iran’s economy to a “natural situation” where it was during the previous three decades.

The government intends to unify foreign exchange rates to send a clear message to foreign investors. It has prepared new contracts to increase investment in the oil industry and the first new oil contracts with international companies under the framework of Iran Petroleum Contract is expected to be signed by the yearend.

In the infrastructure sector, Iran has signed a contract for the acquisition of 118 new Airbus airliners and nearly 100 Boeing jets, which can breathe new life into the Iranian civil aviation industry.

Foreign investors and prestigious enterprises have gained US Treasury permission that has raised hopes for the continuation of JCPOA’s implementation.

  Oil, Inflation and Foreign Investment

The lifting of sanctions has enabled the Oil Ministry to return oil production to pre-sanctions levels.

According to the latest figures, Iran now produces 3.8 million barrels of oil per day and exports 2 million.

Traditional Iranian oil buyers have returned and there are also new customers. Iran has regained its position in the Organization of Petroleum Exporting Countries. The country has insisted that it will not join a plan to freeze crude production before raising output to the pre-sanctions level of around 4 million barrels per day.

 An emergency gathering of OPEC producers and non-members in Doha in April ended in stalemate after Saudi Arabia refused to accept a freeze deal because Iran had refused to join the talks. However, Riyadh significantly softened its stance on Iran in an informal meeting of OPEC members in Algiers last month after the country’s energy minister said Iran, Libya and Nigeria should be allowed to produce crude oil “at the maximum levels that make sense”.

Mohsen Qamsari, director of international affairs at the National Iranian Oil Company, says Iran’s insistence on this position in OPEC has been successful in regaining 80% of the market share it had in 2012, before sanctions were imposed.

Through fiscal policy and monetary discipline, inflation in Iran is now lower than at any time over the past quarter century. The Iranian inflation rate dropped to single-digits in June, fulfilling one of the promises of the Central Bank of Iran and President Hassan Rouhani.

When Rouhani took power in 2013, inflation was at 40.4%, especially in the food sector, and it was affecting people’s lives. But this June, it dropped to a single-digit rate (9.7%) for the first time in 25 years and fell further to 8% in August.

Foreign investment is an indicator directly related to economic stability and reflects the dynamics of an internationalized economy. In Iran, foreign direct investment has fluctuated over the past 20 years, according to United Nations Conference on Trade and Development and World Bank statistics.

In fact, after the removal of sanctions, Iran witnessed a sharp increase in foreign direct investment so that in the first months of 2016 right after JCPOA entered into force, the amount of FDI reached $4.5 billion.

  Stock Market, Foreign Visitors

After it was announced that investment contracts in line with the interests of domestic auto manufacturers such as Iran Khodro and SAIPA had been signed, the key index on Tehran Stock Exchange climbed and stirred up excitement among shareholders in March when the index reached a peak of 90,000 points compared to its pre-JCPOA 60,000.

In the wake of JCPOA, a large number of foreign business delegations, sometimes together with high-ranking political officials and sometimes independently, visited Iran. After meeting with Iranian authorities, they would then go to negotiate with the private sector.

After the JCPOA, nearly 150 high-ranking economic delegations from various countries arrived in the country.

Now the private sector, which had gradually shrunk over the last eight years as a result of the expansion of the government sector, has regained its place.

In 2013, at the beginning of the Rouhani administration, the economy experienced a negative growth rate of 6.8%. Because of a deep recession in different economic sectors, both production and exports in various sectors faced significant drops.

Three years later, as a result of government policies and the economic opening that followed JCPOA, economic growth climbed to 4.4% in the spring.

  Recession to Boom?

Some economic sectors have started to come out of recession, including key sectors like housing and industry.

According to the Central Bank of Iran’s statistics, housing transactions in Tehran rose by 30% in August compared to the same period of last year. As the head of the Union of Real Estate has declared, the first stage of coming out of a housing slowdown has begun.

There has also been an 8% rise in industrial production and exports in the past few months, especially after the economic openings resulting from the JCPOA.

Some $16 billion were put aside by the government to finance 7,500 small and medium companies to get the economy out of recession quicker.

While there has been disappointment that the benefits of JCPOA have not been felt as quickly as expected and many Iranians are still facing economic hardship, it is clear that the economy is moving in the right direction.

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Export Development Bank of Iran, the state-owned bank specializing in financing foreign trade, has managed to reestablish correspondent relations with 90 banks in 65 countries after the lifting of sanctions in January, according to Ali Salehabadi, the bank’s managing director.

 “An agreement with Eximbank of Korea, a three-month refinance line of credit with Switzerland’s BPC Bank for importing medicine, and collaboration with Italy’s Medio Banca over a $2 billion finance under the supervision of the Central Bank of Iran are among other measures taken by the EDBI to reboot banking relations with the outside world,” he was quoted as saying by Economy Ministry news service Shada.

EDBI has also expanded ties with Russian lenders, according to the banker.“Currently we have links with six Russian banks, allowing us to issue letters of credit in ruble and euro.”

“We have also allocated a €10 million credit line to Bank Melli Iran’s subsidiary in Russia, Mir Business Bank.”

EBDI has also signed a contract with Magnit, Russia’s largest retailer, to sell Iranian goods in Russia.

The Export Development Bank of Iran has zeroed in on developing trade with Russia, allocating a €20 million credit line to facilitate exports to the country.

Elaborating on the EBDI’s performance in implementing anti-money laundering policies, Salehabadi said: “EDBI has upheld all the measures announced by the Iran Financial Intelligence Unit (affiliated to the Economy Ministry), and is ranked as the top state-owned bank in implementing AML standards.”

 FSR Confirmed

Salehabadi also referred to his bank being rated by the Capital Intelligence, and said, “We have also plans to start cooperation with Fitch.”

Last week, Capital Intelligence Ratings announced that it has affirmed the Financial Strength Rating (FSR) of the Export Development Bank of Iran (EDBI) at ‘BB-’. The FSR is supported by the bank’s strong capital adequacy, its privileged access to low cost funding (due to its official policy role) and its well managed cost base.

Due to its special remit, and in light of the recent upgrade of Iran’s Sovereign Long-Term Foreign Currency Rating (FCR) to BB-/B/Stable (from B+/B/Stable), EDBI’s support Rating was raised to ‘2’ from ‘4’, which indicates a very high likelihood of further foreign currency liquidity and capital support being made available by the authorities should the bank need it. EDBI’s Long- and Short-Term FCRs were affirmed at ‘BB-’ and ‘B’, respectively, with a ‘Stable’ outlook, and remain at the sovereign level.

The banker went on to elaborate on his bank’s lending performance, saying “EDBI is the only Iranian financial institution offering buyers credit. We allocated $566 million for this purpose during the previous Iranian fiscal year” that ended in March.

The bank’s total paid loans amounted to 57.8 trillion rials ($1.8 billion) during the previous year compared to 44.7 trillion rials ($1.4 billion) in the year before that.

“The agriculture, forestry and fishery sectors received about 9.2 trillion rials ($291 million) during the last financial year -- four times more than the year preceding it,” Salehabadi was quoted as saying.

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Some banks are reportedly offering foreign exchange services through Automated Teller Machines. Confirming the news, Nasser Hakimi, head of Central Bank of Iran’s IT department, said the move is legal as long as bankers meet standards set by the CBI’s foreign exchange department, banker.ir reported on Saturday. The official added that the supervisory department of the central bank should ultimately approve the banks’ recent move.  Early in September, Shahr Bank announced that it has installed a foreign currency exchange ATM in Hasheminejad International Airport in the holy city of Mashhad in northeast Iran. The move comes after CBI’s July decree, which granted banks more authority to conduct forex operations. The decree allowed banks for the first time to trade foreign currency at the open market rates.

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The banking overhaul plan–a roadmap enacted by President Hassan Rouhani to transform the outdated banking system–would allow the banking sector to fend for itself without relying on the Central Bank of Iran, said Masoud Nili, a senior economic advisor to the president.

“The reform proposes a new model for the banking system in which the central bank is no longer responsible for providing resources to the banks, and  lenders are allowed to borrow in the interbank market, which is set to be settled within several nights ,” he told the Persian-language journal Tazehaye Eghtesad published by the Monetary and Banking Institute.

Referring to CBI’s intervention in the interbank market from last November he said, “The central bank managed to lower the rates in the market; however, some banks started to use the market as a systematic method to attract financial resources.”

“This resulted in the allocation of CBI resources to unhealthy lenders.”

The CBI overhaul  plan is based on 10 major factors, namely active management of the interbank market, reinforcing bank credits, balancing the reserve ratio of commercial banks, rating banks and close supervision of  beleaguered lenders,  utilizing open-market tools  in implementing monetary policies, disciplining the money market by regulating  unlicensed credit institutions, increasing capital of private banks, reducing bad debts, merging, reforming, rebuilding and dissolving loss-making money and credit institutions and improving oversight of the lethargic banking industry.

 “What is important now is to keep the banking sector away from a trap – the huge amounts of nonperforming loans. Allowing this trend to proceed unchecked will result in an economic crisis,” he warned referring to the billions in troubled credit and distressed debt that have pushed the lenders into a sea of red ink.

The government of President Hassan Rouhani is struggling with a mountain of debt it inherited from its predecessor. The administration now owes over 1 quadrillion rials ($29 billion) to the banks alone.

The senior economist went on to say that the government averted a crisis by preventing surges in the country’s monetary base.

“The banking network would probably face a crisis if these issues were not resolved,” he said and added that the new plan would help underpin sustainability of the banking sector.

Bank Rating Imminent

Nili is of the opinion that the unhealthy monetary and banking policies of the past have not affected all banks in the same way and therefore they should not be tarred by the same brush. "It is apparent that they need to be rated differently."

According to the overhaul plan, he says, banks with serious problems will be identified, cut off from the interbank market and financed separately. "Therefore the interbank market will be limited to banks that need resources for short terms and this in turn will curb interbank rates which then will translate into lower deposit and lending rates."

Another factor for the CBI in categorizing the banks and dealing with them will be the volume of their toxic assets, according to the presidential aide and respected economist.

Repaying Government Debt

Nili notes that the ballooning government debt to banks has long persisted as one of the biggest dilemmas of the banking system, mainly because the banks were unable to pressure the government to repay the debts and have no idea how and when the debts will be cleared.

"That is why repaying government debt to the banks was incorporated in the banking overhaul plan as an important component. To address this problem the  government will restructure a part of its debt in the form of bonds to the banks."

Nili detailed the scheme, saying for instance, the government owes money to contractors and the contractors owe the banks. Therefore the government will allocate bonds to the contractor who in turn will give it to the bank. "It must be said that these bonds will not create new debt for the government and only the past debts will turn into bonds."

"The bonds have maturities and banks will be assured of the repayment time," he added.

If a bank is in dire need of capital it can sell the bonds, but since the government cannot allow for a new wave of bonds to enter the market abruptly, the CBI will  communicate to the recipient bank that it will only lend to banks in exchange for collateral and inform the banks that they can use the bonds as collateral.

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[screwball]

reform proposes a new model for the banking system in which the central bank is no longer responsible for providing resources to the banks, and  lenders are allowed to borrow in the interbank market, which is set to be settled within several nights ,” he told the Persian-language journal Tazehaye Eghtesad published by the Monetary and Banking Institute.

settled within nights......?

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In relation to forex trading, the interbank market is the global system or network where banks and financial institutions trade currencies between themselves (with "inter" meaning "between").

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The interbank market is the financial system of trading currencies among banks and financial institutions, excluding retail investors and smaller trading parties.

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News ID: 3796449 - Sun 16 October 2016 - 09:09

Economy

TEHRAN, Oct. 16 (MNA) – Deputy Iranian oil minister, while noting that Iran is not after rivalry with Russia in the European gas market, outlined LNG as Iran’s main policy in gas exports to Europe.

Hamid Reza Araghi, Managing Director of National Iranian Gas Company (NIGC), noted that Iran has defined plans to reach Europe’s gas market through liquefied natural gas (LNG) shipments and would not replace Russia who is using pipelines for gas delivery to Europe.

“As ordered by the Leader under the tenets of Resistance Economy, we need to boost exports in order to play a role in global trade arenas,” he continued.

The official underscored that Iran currently owns only one per cent of the global gas trade while the figure needs to reach a minimum of ten per cent; “in the meantime, Iran could launch collaborations with numerous countries and reach the European market through LNG.”

“Iran possesses its own gas market as neighbor states rely on Iranian natural gas,” highlighted Araghi reiterating that Iran does not seek to replace Russia in Europe’s gas market.

NIGC managing director emphasized that the country, for having the world’s largest gas reserves, enjoys excellent capacities for supplying neighbors’ gas demands though financial, political and technical issues need to be resolved over time.

“The volume of Iran’s natural gas production will increase from the current 600 million cubic meters per day to 1.26 billion cubic meters in four years’ time.”

Deputy Oil Minister Araghi further maintained that Iran’s gas recovery from South Pars joint field will equal Qatar in the coming year and the produced gas can be turned into value-added.

 

HA/3795826

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Economic transactions with Iran resolved: Araqchi

1. Politics

October 15, 2016

 

TEHRAN – Deputy Foreign Minister for Legal and International Affairs Abbas Araqchi said on Saturday that the problems related to Iran’s economic and financial transactions with the outside world have been substantially resolved.

According to the nuclear deal, officially called the Joint Comprehensive Plan of Action (JCPOA), all nuclear-related financial and economic sanctions against Iran must be terminated. The deal went into force in January.

Addressing a meeting of the Majlis National Security and Foreign Policy Committee on Saturday, Araqchi said, “The JCPOA is being implemented as planned, but it will show its effects on Iran’s economy over time.

“We are in good shape in the oil industry. Issues regarding economic transactions, finance, insurance and banking have also been solved and there is no impasse in implementation of the nuclear deal,” stated Araqchi who acted as a leading nuclear negotiator with great powers.

He also pointed out that the other countries with which the nuclear deal was clinched must keep their side of the bargain and provide the necessary conditions for implementation of the nuclear deal.

The top diplomat added that the main remaining problem is the U.S. sanctions against Iran, which were not to be lifted, however they are now obstacles to the implementation of JCPOA.

Araqchi further told members of the committee that the sanctions imposed on Iran regarding human rights and terrorism also act as obstacles in the way of implementation of the nuclear deal.

He noted that the U.S. presidential election is also affecting implementation of the nuclear deal as the candidates’ contrasting positions regarding the JCPOA have put businesses and corporations that seek to engage Iran are in a state of “purgatory”. 

The deputy foreign minister also criticized Washington for new anti-Iran sanctions, describing the act as unconstructive.

MH/PA
 

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19 hours ago, millionaire in training said:

 I think that Iraq will come out at 1-1 (as per articles that have said that ) and will start to float . I believe that we will see this start to happen in the coming weeks towards end off year . And I do feel that we will see this happen this year 2016.

Im not sure about Iran. I can see their motivation and progress ......and I agree they won't want to be left behind. Im hoping that they can start off strong and float to their potential rate. I know that I won't be touching it until it reaches at least 1-1. And even then I'll re-evaluate the situation .What would be the point in cashing out before that.  This is why I've also invested in the VND.  I don't have high hopes for it to pay off as well as the dinar/rial. So that one I won't hold on to for the long haul. That will be my "mad money".

Remember folks be smart about cashing out. You're not going to get a second chance to do this again. The potential for growth is unbelievable. You don't want to be sorry that you cashed out too soon when you could of doubled your investment.

 

I love mad money and have plenty! 

[pokerplayer]

6 minutes ago, screwball said:

I love mad money and have plenty! 

 

So do I !! I don't have plenty like you but plan to real quick like !!

pp

[climber7]

3 hours ago, screwball said:

reform proposes a new model for the banking system in which the central bank is no longer responsible for providing resources to the banks, and  lenders are allowed to borrow in the interbank market, which is set to be settled within several nights ,” he told the Persian-language journal Tazehaye Eghtesad published by the Monetary and Banking Institute.

settled within nights......?

As always--great articles SB,and much appreciated.

Just curious though....what articles did all those 'interbank' quotes come from?

Very interesting! I'd like to read them 👍

[blueskyline]

5 hours ago, climber7 said:

As always--great articles SB,and much appreciated.

Just curious though....what articles did all those 'interbank' quotes come from?

Very interesting! I'd like to read them 👍

Could this be a model for other Central Banks as well considering all the currency swaps we have seen in recent times . Could it be that this Central Bank along with others can keep all of their assets now which may be higher re-valued diversified currencies and gold. This leads me to think of article Yota posted in world news about Janet Yellen speaking of the Federal Treasure to embark on " Strong Momentum " that I would think can only be done with instruments or assets that have a strong or newly strong value . Just my random thoughts about the matter .

[screwball]

10 hours ago, climber7 said:

As always--great articles SB,and much appreciated.

Just curious though....what articles did all those 'interbank' quotes come from?

Very interesting! I'd like to read them 👍

Article above from couple of days ago, and last two quotes from Wikipedia I think..

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Western banks coop. with Iran unsatisfactory

News ID: 3796658 - Sun 16 October 2016 - 11:50

Economy

TEHRAN, Oct. 16 (MNA) – CBI Governor Valiollah Seif current conditions of cooperation between Western and Iranian banks do not meet pre-JCPOA expectations.

Governor of Central Bank of Iran (CBI) Valiollah Seif deemed current level of collaborations on the part of Western banks with Iran as unsatisfactory saying “indeed, conditions have changed following the implementation the Joint Comprehensive Plan of Action (JCPOA) as good banking relationships have been created which relatively solve foreign trade difficulties faced by the country.”

“Nevertheless, present ties are not strong enough to be considered as normalization of banking relations,” he emphasized.

Seif went on to note that European states and their banks are willing to launch cooperation with Iranian sides; “unfortunately, the US has failed to remain fully committed to its JCPOA obligations.”

“Western and European bank hold concerns about in communicating with the Iranian banking system for being unsure of America’s following reactions,” underlined CBI governor.

The official called for appropriate reassurance for Western banks to easily establish relationships with Iranian counterparts since good relations had always existed between the two sides for long.

Seif, while reiterating that no negative experience, non-payment or non-collected receivables exist in the history ties between Iranian and Western banks, expressed hope that Americans will carry out the assumed responsibilities in order to create proper grounds for deeper banking ties.

 

HA/3796062

 

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• EU banks ‘still wary’ on interaction with Iran
• Bright future on Iran-France relations
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• OFAC opened better ways for banking transactions with Iran
• Tehran, Beijing to bolster banking ties

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News ID: 3796807 - Sun 16 October 2016 - 16:56

Economy

TEHRAN, Oct. 16 (MNA) – An NIOC official has announced that approximately 62 per cent of Iran’s crude oil exports are delivered to Asian states.

Seyyed Mohsen Ghamsari, Executive Director for International Affairs at National Iranian Oil Company (NIOC), made the remarks adding “presently, the average volume of oil exports to Asian countries stands at more than 600 thousand barrels per day.”

He further touched upon recent crude sails to small Chinese refineries noting “these figures are excluded from overall statistics since small firms purchase products through spot contracts.”

The official also said the volume of the country’s crude exports will rise by 150 to 300 thousand barrels by the end of the current Iranian calendar year (began March 20); “nearly 62 per cent of Iranian crude is being deployed to Asian markets while the rest ends up in Europe and the proportion will remain constant in case of any upsurge in export figures.”

China remained largest buyer of Iranian crude during sanction years enjoying 40 per cent of the share (equal to 400 thousand barrels per day) in Iran’s crude exports.

Ghamsari had previously said Iran is presently exporting 2.2 million barrels of crude oil per day but the figure could be well increased to 2.35 million barrels.

On the crude oil exports to Europe, he said that 600 to 650 barrels of crude oil is exported to Europe per day.

Iran has announced the plan to increase its oil output to four million barrels per day by the end of the present year while the current figure stands at about 3.85 million barrels.

 

HA/IRN82268270

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News ID: 1213689 Service: Economy 

 October, 16, 2016 - 17:29 

TEHRAN (Tasnim) – Iran will on Monday start offering an international tender for oil and gas projects in the country for the first time since the removal of anti-Tehran sanctions. 

National Iranian Oil Company (NIOC) said "reputable and eligible companies" should fill applications for upstream oil and gas projects which will be made available on its website nioc.ir on Monday, Shana reported on Sunday.

It came after an amended draft of Iran’s new model for oil and gas contracts was approved by the government on August 3 after it underwent over 150 minor and major changes.

The new amendments were endorsed after Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei stressed two months ago that no new oil and gas contracts for international companies would be awarded without necessary reforms.

The rights, commitments and responsibilities of all parties in areas such as accounting and auditing, method of financial payment or repayment, technical inspection and maintenance should be clearly specified in the new contracts.

The contracts should also include details on production measurement methods, human resources training, health, safety and environment, imports and exports, insurance, terms of contract termination, force majeure and dispute settlements.

Under the new reforms, the oil ministry has been tasked with approving an overview of the contracts including the agreed price, duration and other general conditions.

The new oil and investment contract for international firms, known as the Iran Petroleum Contract (IPC), will replace Iran’s buyback oil deals. Under a buyback deal, the host government agrees to pay the contractor an agreed price for all volumes of hydrocarbons the contractor produces.

Iran worked on the oil contract model for two years. The country hopes to draw as much as $50 billion a year from major oil companies such as Italy’s Eni SpA and France’s Total to develop its oil and gas fields in the wake of a lasting nuclear deal between Tehran and world powers. 

There has been growing enthusiasm for ties and cooperation with Iran since a lasting nuclear deal between Iran and the Group 5+1 (Russia, China, the US, Britain, France and Germany) took effect on January 16.

The deal, also known as the Joint Comprehensive Plan of Action (JCPOA), terminated all nuclear-related sanctions on Iran and prepared the ground for a much-anticipated economic boom.

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OFAC opened better ways for banking transactions with Iran

News ID: 3797041 - Sun 16 October 2016 - 14:55

Politics

TEHRAN, Oct. 16 (MNA) – Iran’s deputy FM said despite certain challenges facing the implementation of the JCPOA, OFAC has modified some guidelines a few days ago and opened new and better ways for banking transactions with Iran.

Abbas Araghchi, Iran’s Deputy Foreign Minister for Legal and International Affairs, attended the final session of Iranian Parliament's nuclear committee on Saturday where he discussed the latest developments in the implementation of Iran’s nuclear deal, dubbed JCPOA.

The nuclear committee of the Parliament's National Security and Foreign Policy Commission is tasked with reviewing the implementation process of the JCPOA and compiling reports to be presented to the open sessions of the Parliament.

“About the reports, there are simultaneous challenges, some lack of commitment on the other side which needs to be dealt with, and there are also the achievements and economic progress of various bodies in the country,” Araghchi said.

About the challenges he said, “the other side was committed to create appropriate conditions for a successful implementation of the JCPOA, but they failed to so. We are constantly following up on these challenges.”

“Our current major problem is banking relations, but not in a way that we would say we have come to a dead-end in banking transactions,” Araghchi said. “Our banking affairs are being done, although some problems and challenges still exit which requires the US to take further steps in regard to lifting of sanctions.”

He added that the Office of Foreign Assets Control (OFAC) of the US Department of the Treasury has modified some of its guidelines a few days ago and opened new and better ways for non-US banks to do US dollar transactions with Iran.

MS/3796515

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Vice-governor of the Central Bank of Iran says the banking overhaul plan has been devised, among other things, to curb the effects of a war between the banks and credit institutions on interest rates.  

“One of the goals of the [overhaul plan] package is to eliminate the negative consequences of the war of banks in luring savings to balance interest rates proportional to the inflation rate,” Akbar Komijani said in a talk with Tazehaye Eqtesad Publication as reported by IBENA.

Banks, saddled with billions in non-performing loans and dodgy investments, have been trying desperately to attract savings in order to stay afloat. Their persuasion tactics in recent years have deteriorated into a war in which they offer higher returns on deposits, resulting in high interest rates.

“The interest rate war has exacerbated the issue of the banks’ liquidity flow and therefore it is imperative deposit rates be cut further with the goal of checking the liquidity growth,” he added.

The MCC-- CBI’s monetary policy committee–lowered interest rates twice in the past six months, citing the significant drop in inflation as the main reason. Officials close to the decision-making body had hinted that another rate cut could be coming soon – a plan strongly opposed by the lenders.

The banking overhaul plan was enacted by President Hassan Rouhani with the aim of reviving the lethargic banking system. The blueprint has been hailed by monetary officials as a giant step in modernizing the outdated banking system and addressing its many challenges.

On the other hand, notes the senior official, with the aim of stabilizing the interest rates and making directives issued by the Money and Credit Council relevant and effective, it is necessary that the CBI adopt a different tone when dealing with banks.

 Calling it Quits

In his opinion, based on the level of banks’ compliance with CBI regulations and based on their performance and conduct, the central bank must employ “various incentives and punitive measures to contain and reverse the pattern that makes the way for price wars and defuse its effects.”

Komijani notes that in the reform plan, efforts have been made to terminate the effects of rivalry on bank interest rates, increase the capital of banks, restructure the government debts to banks and address the mounting problems of bad loans.

The action plan also seeks to solve issues about liquidity and banks’ soured assets with the goal of creating suitable grounds to implement fundamental reforms in the monetary system.

“Approval of regulations by the parliament, effective action on part of the CBI to monitor and deal with the uncertified financial institutions, issuance of government bonds and making them marketable, incorporating the cost of bonds in the annual budgets and a clear timely repayment mechanism for the bonds, proper management of government debts and setting a ceiling for the issuance of bonds proportional to the country’s GDP,” are among the 10 prerequisites that will insure the success of the Banking Overhaul Plan, as detailed by Komijani.

Prioritizing the repayment of any new debts through issuance of bonds in the capital market, devising a cap for the bonds in CBI’s balance sheet, securitizing the bonds mutually by the CBI and the banks and implementing open market policies, paying attention to Islamic finance principles in designing and issuing the bonds and allocating the necessary budget to increase the capital of governmental banks are the other factors pursued by the CBI in its reform plan.

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Quote

 

The Central Bank of Iran has issued new guidelines clarifying domestic banks’ interaction with their foreign peers and businesses. The guidelines, published in the form of a directive Sunday, comes after the US Treasury Department’s recent move to help further ease restrictions on Iran's dollar transactions.  

The CBI is cognizant of the recent "alleviation of misgivings" about financial dealings with Iran and requires banks to compel international entities to meet their commitments vis-à-vis Iran.

“According to the terms of the nuclear agreement, which came into effect in January, the six powers – US, Britain, France, China, Russia plus Germany – are supposed to update (revise) their restrictive measures over interaction with Iran. They also are supposed to inform the public about the updates,” says the CBI, as reported on its website.

Iranian entities not on the sanctions list are allowed to open US dollar accounts in non-US banks across the world, says the regulator. “There is no risk in conducting banking operations for Iranians as long as transactions do not involve financial institutions in the United States.”

US sanctions on Iran are not applicable to non-US financial institutions and cannot be used as justification for refusing services to Iranians, the CBI affirms.

It also notes that working with Iranian entities would not jeopardize foreign banks’ relations with US financial institutions, as feared by many big lenders and insurance companies still hesitant to resume normal relations with post-sanctions Iran.

“According to the nuclear agreement, US-affiliated companies in other countries, are also allowed to restart financial ties with Iran,” the CBI added.

Banks are also informed that the non-US entities and individuals are allowed to engage in transactions with companies that are minority-owned or wholly controlled by Iranian entities.

The Office of Foreign Assets Control of the US Treasury Department had announced that it is not necessarily sanctionable for a non-US person to engage in transactions with an entity that is not on the SDN (specially designated nationals) List but that is minority owned, or that is controlled in whole or in part, by an Iranian or Iran-related person on the SDN List.

The SDN -- specially designated nationals -- list comprises certain Iranian companies and people who are still subject to US sanctions for a variety of reasons, including Iran’s ballistic missile program, human rights record and support for groups the US claims to be terrorist organizations.

The CBI also says domestic entities "have no right to use sanctions" as an excuse for not offering services inside the country.

The guidelines, issued by the US Treasury Department's Office of Foreign Assets Control on Friday, clarify that non-US banks can do dollar trades with Iran, provided those transactions don't pass through financial institutions in the United States.

The guidance comes after months of complaints from Tehran, which says that remaining US sanctions have frightened away trade partners and robbed Iran of the benefits it was promised under the nuclear deal it concluded with world powers last year.

Valiollah Seif, CBI governor, also complained about the current state of international banking relations, saying that it is not “satisfactory.”

“Many things have indeed improved after the lifting of the sanctions in January and we have managed to establish relatively good relations with foreign banks,” he said recently.

“But the current state simply cannot be seen as normal."

 

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Iran to start bidding for oil, gas projects on Monday

1. Economy

October 16, 2016

 

Iran will begin taking applications on Monday for an unspecified number of energy projects, the oil ministry's news agency Shana reported on Sunday, as the country moves to launch exploration and production contracts after the lifting of sanctions.

State-run National Iranian Oil Company (NIOC) said "reputable and eligible exploration & production (E&P) companies" should fill the applications for upstream oil and gas projects which will be made available on its website nioc.ir.

Interested companies will have until November 19 to submit their qualifications, and the government will publish a list of eligible bidders on December 7, according to Shana.

The announcement marks an acceleration in Iran’s effort to rejuvenate its energy industry since economic sanctions were eased in January. OPEC’s third-largest producer is seeking to attract investors with a revised oil investment contract to boost output at fields it shut when exports were restricted. The country wants to attract more than $100 billion in investment to increase its oil production by one million barrels a day by the start of the next decade.

NIOC wants to sign new development contracts with foreign and domestic companies during the current Iranian calendar year, which runs through March, Mehr News Agency reported on September 17, citing Ali Kardor, a deputy oil minister and NIOC managing director.

(Source: agencies)

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Iran tells banks US allowed dollar deals

Sun Oct 16, 2016 5:19PM

1. Home
2. Iran
3. Economy

Iran tells its banks that the US Treasury has effectively cleared the way for doing dollar-dominated transactions with Iranian individuals and companies. 

Iran says the US Treasury Department has effectively opened the way for non-American banks and financial institutions to proceed with dollar-dominated transactions with Iranians.  

The Central Bank of Iran (CBI) in an announcement has told the banks across the country that any failure by non-American banks to provide dollar-related services to Iranians is “unacceptable” in light of the US Treasury’s recent update on doing business with Iran. 

“Providing dollar-related services [to Iranians] will no longer expose non-American banks to the risks of sanctions provided that they stay clear of US financial system,” the CBI said in its statement.

“Therefore, non-American banks cannot use US sanctions against Iran as an excuse for refusing to provide dollar-related services to Iranian individuals and entities.” 

The Treasury Department in an updated guidance for doing business with Iran in the post-sanctions era said some previously prohibited dollar transactions with Iran by offshore banking institutions are allowed as long as they do not enter the US financial system.

The CBI further in its statement emphasized that non-American banks cannot refrain from providing services even to companies that may be controlled by a person or organization still subject to US sanctions.

“Foreign banks and companies should not use the existence of certain ownership relations as an excuse for failing to provide services to Iranian banks,” read part of the statement that has been widely covered by the Iranian media.

“It is necessary for the banks to openly come out and remind the foreign parties that such claims are against the commitments of the P5+1 with regards to the Joint Comprehensive Plan of Action (JCPOA).”

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Iran says plane deliveries still pending talks

Sun Oct 16, 2016 7:3PM

1. Home
2. Iran
3. Economy

Iran’s Deputy Foreign Minister Abbas Araqchi says Iran Air is negotiating with Airbus and Boeing to resolve the technical issues that are hindering the delivery of planes purchased from the two global aviation giants. 

Iran says technical issues are to blame for the delay in receiving the airplanes it has purchased from global aviation giants Airbus and Boeing.  

Iran’s Deputy Foreign Minister Abbas Araqchi said what was previously obstructing the delivery of the planes were the related authorizations by the US Treasury Department which were issued last month. 

“The delivery of the planes now depends on the finalization of negotiations between Iran Air from one side and Airbus and Boeing from another,” Araqchi told Iran’s ISNA news agency.

He emphasized that negotiations on plane purchases are complicated and comprise many technical and legal issues. 

The official added that Iran Air hopes to receive the first planes it has purchased in the near future. 

On 21 September, Airbus said it had obtained an initial license from the US Treasury’s Office of Foreign Assets Control (OFAC) for the early delivery of 17 A320 or A330 jets to Iran. This will be part of a deal worth above $10 billion that was signed in January for the delivery of above 100 planes to the Islamic Republic. 

The announcement by Airbus was immediately followed by a similar move by Boeing which said OFAC had given the authorization for the company to proceed with a deal it had signed with Iran in June to sell 80 planes to the country.  The company is also expected to lease 29 other planes to the Islamic Republic under the same deal which is estimated to be worth $25 billion. 

Officials in Tehran have already announced that Iran needs to purchase between 400 and 500 commercial airliners over the next decade to rejuvenate its ageing aviation fleet. 

The country’s current aviation fleet is comprised of around 140 planes with an average age of around 20 years, with many in desperate need of replacement.

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On 16 October 2016 at 8:13 PM, pokerplayer said:

 

So do I !! I don't have plenty like you but plan to real quick like !!

pp

I am just an all or nothing type of guy.....I have plans which include property purchases and business acquisitions..