TEHRAN (Iran News) Mohammad Reza Farzin made these remarks during a coordination meeting with petrochemical holdings at the Iran Currency and Gold Exchange Center on December 30. He commended the petrochemical industry for fulfilling its commitments by returning foreign currency earnings to the economy. Farzin noted that daily transactions in the exchange center could soon reach approximately 20 trillion rials, highlighting its significant influence on the country’s financial industry.

Farzin emphasized the efficiency of the commercial forex system, enabling the Central Bank to ensure the country’s forex needs are met in a market-based manner. Suppliers can use this system to secure funding for development and operational needs. The system’s design eliminates rent-seeking opportunities for intermediaries and ensures a fair rate for both suppliers and demanders.

He added, “Our objective is to minimize unofficial market transactions and shift all legitimate commercial and service-related forex demands to this regulated market.”

Farzin stated that the commercial forex market could become the benchmark for foreign exchange rates in Iran. Referring to the $65 billion worth of transactions in the NIMA system last year, he suggested the new system would surpass these figures and serve as a reliable indicator for other markets.

“Rate signaling from the commercial forex market is crucial. Previously, NIMA rates influenced commodity markets but had little impact on asset markets. We aim to establish a more comprehensive signaling system,” Farzin remarked.

The Central Bank Governor stressed the importance of economic stability across various markets. “Uncertainty and instability harm economic actors. We must create conditions where rates are predictable, even amid political and security shocks,” he said, urging collaboration from the private sector to achieve this goal.

Farzin announced plans to introduce a currency bond market to address funding challenges caused by international sanctions. “Currently, 92% of the country’s financial burden is shouldered by the banking system. Diversifying financing methods is essential to sustain development,” he noted.

Mohammad Aram, Deputy Governor for Forex Affairs, praised the petrochemical sector’s cooperation in supplying currency via the commercial forex system. He expressed hope for increased currency offerings from this sector, particularly during the final days of the year.

Farzin also highlighted a structural transformation in the NIMA system, marking the first time the market operates purely on supply and demand principles. This approach reduces risks and corruption while enabling optimal rate discovery.

Ahmad Mahdavi, Secretary-General of the Petrochemical Industry Employers Association, reported significant growth in exports and forex sales by petrochemical companies. He highlighted that $7.144 billion had been sold through NIMA this year, a 7% increase compared to the same period last year.

Additionally, since the inception of the commercial forex market, petrochemical firms have sold $516 million, demonstrating their readiness to participate actively in the new system.

Mahdavi concluded by highlighting 49 planned projects under the seventh development plan, which are expected to generate $25 billion in exports annually and create an estimated $40 billion in value for the sector.

This initiative aims to establish a regulated market that can bridge rate gaps, eliminate speculative activities, and meet the real forex needs of the economy.

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Speaking at a meeting of the government’s economic coordination headquarters on Tuesday, Rouhani said the current slump in the value of Iranian rial is temporary.

“The shock created in the foreign exchange market is temporary and has no fundamental economic reason and the balance must return to the exchange market.”

The president further said that international psychological warfare and unrealistic anxiety among the people are the reasons for the fall in the value of Iran’s national currency, the rial.

“Psychological warfare against Iran, as well as the creation of unrealistic anxiety among people, are the main causes of the recent fluctuations in the foreign exchange market,” he added, according to the government’s official website.

The president said the reopening of Iran’s border and the return of exports and imports to normal conditions will be effective in restoring calm to the foreign exchange market.

“Expansion of exports and successful efforts to return the forex revenues to the country …will create a calmer situation in the foreign exchange market,” he added.

He highlighted the role media outlets can play in creating a calm atmosphere in the country’s economy and allay the people’s concerns over “short-term” fluctuations in the forex market and called on all officials – from the central bank to supervisory bodies – to join forces against profiteers.

“We all should strive to prevent the rise in forex rates from impacting other commodities and goods, and try to control the short-term and temporary fluctuations,” Rouhani added.

The Iranian rial fell to its lowest ever rate against the US dollar on the unofficial market on Tuesday.

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“There are no worries regarding unpredictable shocks in the market and people don’t have to worry about sudden rises in the exchange rates,” Abdolnaser Hemmati told ILNA on Tuesday.

Asked about the supply of foreign currency for the imports of basic goods in the upcoming year, Hemmati said: “Necessary provisions have been made in this regard and we have not only considered the foreign currency needed for the imports of basic goods but also for the imports of raw materials and machinery by our producers.”

Pointing to the preferential trade agreement with the Eurasian Economic Union (EAEU), the official said the processes for trade with these countries are well underway and the situation will improve and new capacities will be created for increasing the country’s exports.

Following the assassination of Lieutenant General Qassem Soleimani in a U.S air raid in Iraq on Friday, Iran’s foreign currency market undergone some fluctuations. The central bank, however, believes that such changes in the currency exchange rates are short term and the CBI management has restored balance in this market.

Since the re-imposition of U.S. sanctions on Iran, the central bank has been seeking ways to protect the national currency with measures that include setting up a government-run foreign-exchange platform known as NIMA to quell the black market and controlling interest rates.

Back in December 2019, Hemmati had said that the country’s forex market was re-stabilized after a turbulent year.

The official said that despite the continued pressure from U.S. sanctions, the country’s non-oil exports continue to rise and the Forex Management Integrated System, locally known as NIMA, is supplying the importers with their required foreign currency.

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