Government Should Allocate Foreign Currency Only for Essential Goods

TEHRAN (Iran News) In an interview with IRNA, Mohammad Lahouti, chairman of the Confederation of Iranian Exporters, commented on the performance of the Iran Currency Exchange Center and the recent revival of its second trading floor. He explained that the center was initially designed to operate with two platforms: one for importers eligible under clause one of foreign trade regulations, and a second for small and medium exporters to settle their foreign exchange obligations under market-based, negotiated rates.

“From the outset, the plan was to create a dual system without imposed rates,” Lahouti said. “But shortly after launch, both floors were merged in pursuit of a single exchange rate, which drove the NIMA rate upward to nearly 670,000 rials per dollar, while negotiated rates fell to around 700,000 rials. This effectively eliminated flexibility for smaller exporters.”

According to Lahouti, the merging of these platforms reintroduced a government-controlled exchange rate, restricting clause-two exporters from fulfilling their obligations. “We repeatedly warned officials this would not work,” he said. “Just like in 2018, when the government’s 42,000-rial fixed rate failed to unify the market, this strategy too was bound to collapse.”

After nine months of disruption, the Central Bank recently revived the second trading floor, allowing clause-two exporters to resume trading. Importers are now required to purchase currency directly from exporters through this platform.

Lahouti criticized what he described as contradictory decision-making in trade policy. “Frequent changes in rules have paralyzed exporters and discouraged them from continuing operations. Importers also face uncertainty, unable to plan long term.”

He added that the second trading floor has yet to reach full maturity. Importers accustomed to cheaper currency remain reluctant to buy at higher rates, while exporters, sourcing raw materials at free-market prices, cannot sell below market value. “Over time, this imbalance should stabilize—provided the Central Bank does not interfere again,” he noted.

Lahouti warned that if authorities reintroduce price fixing, the policy would fail just as earlier attempts did.

Outlining a proposal from the Chamber of Commerce, Lahouti said: The government should guarantee currency only for essential goods such as food and medicine; All other imports must be financed solely through export earnings; and the Central Bank should act only as a supervisory body, overseeing transparent transactions without direct intervention in pricing.

He argued that such a system would reduce long queues for currency allocation and ease pressure on both importers and exporters. “If importers of raw materials are no longer dependent on the official exchange system, delays will diminish. With greater supply from exporters, market rates could decline naturally,” Lahouti explained.

He further suggested that for major exporters such as petrochemical and steel companies—who benefit from subsidized energy—compensation could be made through unified feedstock pricing or export tariffs, ensuring fairness without distorting the currency market.

According to Lahouti, implementing this dual approach could revive Iran’s foreign trade, resolving bottlenecks in both exports and imports. “If import procedures are streamlined, factories can plan reliably for raw material supply, while exporters can settle obligations at real exchange rates,” he said.

The government, meanwhile, would save scarce resources by focusing subsidies only on essential goods. This, he argued, would enable greater support for low-income households through expanded subsidies or digital rationing systems.

“Even if exchange rates rise, government revenues would also increase, allowing better protection for vulnerable groups,” Lahouti noted. “Ultimately, this benefits consumers while reducing opportunities for rent-seeking and corruption.”

Turning to broader issues, Lahouti highlighted the involvement of 27 different institutions in Iran’s import-export process. He recalled the judiciary’s recent report on the Shahid Rajaei port explosion, which identified numerous organizations as contributing to procedural failures.

“This reflects the complexity of our trade system,” he said. “The overlapping responsibilities of multiple agencies not only delay customs clearance but also cause cargo backlogs at ports.”

Despite a sharp rise in the value of foreign currency, Lahouti warned, Iran’s trade balance remains negative due to these structural inefficiencies. “The current framework has not facilitated trade but rather complicated it further,” he concluded.