TEHRAN (Iran News) – A member of Tehran Chamber of Commerce, Industry, Mine and Agriculture says what the government says on reducing the inflation and forex rate depends completely on the amount of oil sales and reiterated that limiting the trade to only some certain countries is not good policy.

Speaking to ILNA, Ferial Mostofi said that in the past years all governments have talked about controlling the inflation but the reality of the market shows that all of them have been unable in curbing the inflation.

She termed inflation as the biggest threat to the national economy, adding that in recent years lack of proper management in economy and the international sanctions have led to the growth in liquidity and this growth has caused rise in inflation while in all developmental plans the governments had decided to unify the fore rate but all their words have left as just slogans.

She noted that the main task of the Central Bank in economies of the countries is to control the inflation, adding that in Iran the Central Bank is some part of the government and therefore it cannot focus on its main task which is to curb the inflation.

She reiterated that if the government tries to advance the economy with its past policies it will be unable to curb the inflation because curbing the inflation by the government needs precise planning and their proper implementations.

Ferial noted that one cannot expect a single-digit inflation rate this year because the market says so. She added that the supply-and-demand mechanism should determine the prices in the market and when there is not enough forex in the market, it is natural its price to go up. She reiterated that sanctions have also increased the price of forex in the country, noting that once Iran’s oil revenues used to exceed $100b but today it is around $16b and access to its money is also difficult.

She said that if the country can sell oil easily and return its money, it is expected the inflation and forex rate to decrease because curbing inflation is possible in the healthy economy while Iran’s economy is currently in the unhealthy condition.

She said that almost 70% of the trade in the world is done in dollar but it is wrong decision for Iran to focus on other currencies and restricting trade to some certain countries is not a correct policy and its outcomes are evident in the economy.

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The same kept happening to the euro’s rate for the second successive day, which fell by 150,000 rials on Tuesday, to be sold at 236,000 rials in the foreign currency market, IRNA reported.

On Tuesday, official currency exchanges sold and purchased each US dollar at 206,000 rials and 199,000 rials respectively.

According to sanarate.ir, an information website belonging to the Central Bank of Iran (CBI) announcing the rate of foreign currencies in the domestic market, the rates of the dollar and euro had declined by 150,000 rials and 170,000 rials on Monday to stand at 229,160 rials and 253,360 rials, respectively.

Over the past few days, prior to the start of the downward trend, the rates of the two major currencies had kept soaring, reaching record highs.

The rate of the rial began its declining trend in May 2018, when the US withdrew from the Joint Comprehensive Plan of Action, signed between Iran and the P5+1 in July 2015, and the reimposition of Washington’s unilateral sanctions on Tehran. Mainly targeting Iran’s foreign trade, including oil exports, and the banking sector, the sanctions have been imposed in a bid to cripple the Iranian economy, a pipe dream pursued by the US and its allies, including Israel, which never came true.

Iranian officials maintain that in addition to the unilateral sanctions, psychological factors also led to the increase in foreign currency rates over the past days.

In an address to a press conference on Tuesday, Ali Rabiei, the Iranian government’s spokesman, blamed psychological manipulation of public opinion by ill-wishers on social media and abroad for the rise in the rates, according to mehrnews.com.

He said such bids lead to an anticipation of inflation in the domestic market.

Rabiei added that among the reasons for the drop in the rates is that Iranians have stopped heeding such activities and propaganda.

“Our foreign currency income will definitely increase in the light of our oil exports and the injection of forex revenues into the domestic economy. The real foreign currency rates are definitely lower than what we see in the market today.”

He stressed, “During the past two weeks, Iranian President Hassan Rouhani and CBI Governor Abdolnaser Hemmati explicitly announced that the increasing trend of forex rates would not continue, and the reason is clear. The realities of our market, as well as the balance between supply and demand, show that the increase in rates is not real.”

He added Iranian exporters are increasing their injection of foreign currency income into the country’s secondary foreign exchange market, known by the local acronym Nima (Integrated Forex Deals System), thus tilting the balance in favor of the supply side of the domestic market.

Rabiee said this comes as the government has also controlled the demand side by boosting domestic production.

“Stimulating domestic production will not only reduce domestic demand for foreign currency resources but will also help further increase the country’s output and reduce the price of other products.”

He noted that the government’s diplomatic moves in the field of foreign policy have also helped provide the country with better access to foreign currency resources, expressing hope that Iran’s exports would grow with the easing of restrictions imposed on trade between regional countries due to the coronavirus outbreak.

The pandemic has led to the closure of border crossings between Iran and its neighbors and, thus, reduced exports from the country.

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Interior Minister Abdolreza Rahmani Fazli said on Tuesday effective decisions have been made to alleviate the foreign currency and gold coin market.

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