Where did the government's decision to pre-sell the currency go?

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News ID 450728

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Following the decision to publish the Euro deposit:

Where did the government's decision to pre-sell the currency go?

Abdul Nasser Hemmati

Abdul Nasser Hemmati, while announcing the decision to publish the Euro deposit, announced that the government's pressure on this bank in 1996 to pre-sell foreign currency did not reach anywhere, and this action could lead to the birth of "Sultan Euro"!

According to  Eqtesadonline  , quoting Mehr, Abdul Nasser Hemmati , Governor of the Central Bank, announced the bank's decision to publish the Euro Deposit Certificate on July 29, and wrote on his personal Instagram page: The Central Bank will soon submit the Euro Deposit Certificate to the Monetary and Credit Council. Will provide.

According to Hemmati, this will be done in line with the current monetary policy framework and the implementation of open market operations, in order to manage liquidity and drive inflation towards the 22% target, and based on that, the central bank is set to issue a Euro certificate with a clear profit. , And by selling at the market rate, to collect Rials. In this plan, the central bank is committed to paying the same amount to the euro at maturity, relying on sufficient reserves of its euro banknotes.

Where did the previous government decision to pre-sell the currency go?

This is not the first time that Hassan Rouhani's government has decided to issue a currency certificate. In February 1996, at the height of the currency market challenge , the central bank was required to pre-sell the currency in addition to pre-selling coins. This assignment was one of the meetings that has been held twice a week since September 1996 in the presence of Ishaq Jahangiri, First Vice President and the Central Bank, to manage the foreign exchange market.

 

 

The decree, announced on February 8, 1996, required the central bank to provide the conditions for pre-selling foreign currency within two weeks.

The government's goal was to raise liquidity from the community, but this decision was not implemented with the resistance of the Central Bank, so that another bitter experience would not occur along with the auction of the country's gold reserves; This was one of the few times during the tenure of General Director Valiullah Seif that the central bank opposed the government's wrong decision.

The Central Bank intervened in the market from January 1995 to May 1996 by order of senior officials to lower the price of the dollar on the eve of the presidential election (the price of the dollar rose from 4,170 tomans to 3,710 tomans on the eve of the election). The heavy intervention continued in the two months after the election, injecting $ 2 billion in foreign exchange, and then, with daily (average) injections of several million dollars, but as a salty blue, only to The market thirst quenched.

In such a situation, the pre-sale of Tir currency was to get rid of the country's foreign exchange reserves, and in the end it remained a decision and was not implemented.

How was the Sultan of Coins born?

At the same time, by order of senior officials, 50 tons of the country's gold reserves were auctioned in the form of pre-sale of coins, and a total of 7,600,000 Bahar Azadi coins were sold; The pre-sale that led to the birth of the "Sultan of Coins"; Vahid Mazlumin was arrested in July 1997 with two tons of gold in the capital and hanged less than four months later.

Meanwhile, the National Inspection Agency announced that a 31-year-old citizen had bought 38,250 coins in a pre-sale plan for a gold coin by the Central Bank. He had paid more than 53 billion and 500 million tomans for these purchases.

At what cost to collect liquidity?

The issuance of the Euro deposit certificate is now on offer to the Monetary and Credit Council, and the details are not yet known. But there are a few important things to keep in mind:

1. This proposal shall be approved by the Monetary and Credit Council by any mechanism, and its maturity shall not extend beyond the lifespan of this State, and is an obligation established by the Twelfth Government for the Government of 1400. Therefore, it should be decided with more sensitivity and accuracy.

2. Although "collecting liquidity" is an acceptable goal, it should not be forgotten that at the present time the "market thirst for currency" is very high and the inaccuracy in issuing euro deposit certificates can lead to the birth of "Sultan Euro" in the Iranian economy.

3. International conditions (due to the spread of the corona and the tightening of sanctions) require the government to be more careful in maintaining the country's foreign exchange reserves; Accordingly, and in the context of months, the country's production flow has been interrupted due to the central bank's strictness in allocating currency (even Nimayi currency) with the aim of managing foreign exchange expenditures, and the forthcoming outlook does not seem to open in the Corona area any time soon. (Which will lead to the revival of international trade) and sanctions, by what logic did the central bank decide to issue a euro deposit certificate?