IRAN NEWS ECONOMIC DESK

TEHRAN – Director of Legal Studies Department of Iran’s Central Bank yesterday reacted to a Bahraini court’s verdict on Iranian banks and called it something lacking legal validity and it is just a political move.

Bahraini court on Wednesday issued legal verdicts in five money-laundering cases, convicting the Central Bank of Iran, along with a number of Iranian banks, the Future Bank, and five of its officials.

The court found all the defendants guilty, sentencing the Future Bank officials to five years in prison, and to 1 million Bahraini dinars (SR10 million approximately) fines each.

The court also sentenced the Central Bank of Iran and the other banks implicated in the wide money-laundering scheme to fines of 1 million Bahraini dinars each.

The total of fines imposed on the Iran Central Bank and the other implicated banks reached 37 million Bahraini dinars. The court also ordered the confiscation of the illegally transferred money that reached $112 million.

But on Saturday, Director of the Legal Studies Department of Iran Central Bank, reacting to the report, said that so far Bahrain government has not communicated anything on Iranian banks and the CBI, adding that in case the court had issued the verdict, it would be legally invalid because the court has not given the defendant chance to defend.

Morteza Etebari said that such a verdict is a political move and it is natural that Iran will not refrain from any effort to defend its rights and Bahrain government is responsible for the consequences.

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IRAN NEWS ECONOMIC DESK

TEHRAN – Iraq has agreed to release Iranian funds blocked in the Arab country because of American sanctions for Iran’s purchase of staples and basic goods, the Central Bank of Iran (CBI) governor Abdolnasser Hemmati said after meetings with senior Iraqi officials in Baghdad on Monday.

Hemmati said in a post on his Instagram page that some “good agreements” had been reached on the issue in a trilateral meeting involving him and his Iraqi counterpart as well as the CEO of Trade Bank of Iraq (TBI) where the Iranian funds are blocked.

Iran has billions of dollars in a TBI account which processes Iraq’s payments for imports of natural gas and electricity from Iran.

However, the funds have been blocked because of U.S. sanctions on Iran which restricts the use of dollar for transactions involving Tehran.

The assets held in Iraq belong to the Central Bank of Iran, which is the main supplier of the basic demands in various sectors such as industry, agriculture and healthcare, he explained, saying Tehran would begin to withdraw money from those funds according to its needs.

The commodities that are categorized as basic needs are exempted from the cruel and unilateral sanctions imposed by the U.S., the Iranian official noted.

Hemmati said Iraqi Prime Minister Mustafa Al-Kadhimi had welcomed the agreement to use the funds to reimburse Iran’s basic goods imports.

“In the meeting with the Iraqi premier … he issued the required orders to the Iraqi central bank and the TBI to speed up the implementation of the agreement,” said Hemmati, adding that Kadhimi had vowed to personally follow up the case on a weekly basis.

Hemmati made a first visit to Baghdad in June to pursue the case of blocked funds in Iraq. The CBI governor had expressed optimistic remarks about the release of funds in Iraq on that occasion but a final decision on the issue has been waiting reportedly because of growing American pressure on Baghdad.

A high-ranking trade and banking delegation accompanied Hemmati in his Monday trip to Iraq. The top banker said the visit would bolster the already growing trade relations between the two countries.

Iraq is only second to China in purchase of goods and services from Iran with recent figures showing Iranian exports to the Arab country reached $565 million in value terms in the Persian calendar month to September 21.

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According To Iran News, The Central Bank of Iran (CBI) approved emergency funding worth nearly $5 billion to offer cheap loans to businesses hit by the new coronavirus pandemic.

CBI governor Abdolnasser Hemmati said on Thursday that major lenders in the country would start giving the loans “in the earliest time possible”.

The loans will be offered at a heap rate of 12 percent, said Hemmati, with a repayment period of two years, Press TV reported.

He said the decision came after a high-level government meeting earlier in the day on the economic measures needed to respond to the virus pandemic in Iran.

The announcement came after Iranian president Hassan Rouhani said earlier on Thursday that cheap loans will be available to businesses and manufacturing units soon to help them cope with the impacts of the pandemic.

Rouhani said at a cabinet meeting that the government would ask for nearly $1 billion worth of support package from Iran’s severing wealth fund.

Iranian Vice President Eshaq Jahangiri, who chairs the special economic committee of the government on coronavirus, said that the loans could reach a total of 1,000 trillion rials (6.25 billion).

Jahangiri said part of the funds would go to benefits to people who have lost their jobs and others could cover urgent necessities in the health sector.

The new funds come on top of previous government measures to help families affected by the outbreak of the new coronavirus and finances provided to the health ministry for imports of vital medical equipment and drugs needed to fight the virus.

Nearly 30,000 Iranians have been tested positive for the new coronavirus, known as COVID-19, since the infection was spotted in the country last month.

More than 10,000 have recovered from the illness while more than 2,200 patients have died, based on latest figures provided by the Iranian health authorities as of Thursday.

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IRAN NEWS ECONOMIC DESK

TEHRAN – Iran’s chief banker says the petchem sector in the country will further grow thanks to a huge investment by China which has the backing of the country’s main credit insurance provider Sinosure.

Abdolnasser Hemmati, who serves as the governor of the Central Bank of Iran (CBI), said that Sinosure is providing insurance for finances of up to $3.7 billion allocated by People’s Bank of China to refining and petrochemical projects in Iran.

“We will soon witness a significant increase in petchem production,” said Hemmati in a post on his Instagram page, adding that the Chinese investment will go to five different projects in various parts of Iran.

The announcement comes amid major plans for empowering the downstream section of Iran’s oil and gas industry amid tough sanctions imposed by the U.S. which has made direct oil sales more difficult.

Iran has been exporting more of its petrochemcials since the U.S. imposed the sanctions in November last year while estimates sugges the value of such shipments from the country could reach $25 billion by 2021. That figure equals to half of Iran’s total crude sales before the sanctions were imposed.

Iran has mastered the expertise needed for production of a special polymer used in insulin syringes.

Hemmati said the petchem sector is currently a major provider of hard currency for the Iranian government, adding that that a fifth of the country’s total currency needs are provided through the sales of the petrochemical companies.

The CBI chief said that petchem companies had managed to bring back more than 90 percent of the income they had earned from exports despite banking restrictions that make payments by customers more difficult.

As part of a massive plan, the Iranian government eyes to increase the annual revenues earned from production of petrochemicals in the country to $93 billion by 2025.

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IRAN NEWS NATIONAL DESK

Hemmati’s comments on Instagram came amid reports that the rial had resumed its long-anticipated recovery against the US dollar on Thursday as it traded 118,000 against the greenback, a surge of around 13 percent compared to earlier in July when each dollar had been sold for 135,000 Iranian  rials.

“Today, me and my colleagues in the CBI are proud that we have had a tiny share in the all-out resistance and victory of the Iranian people against this big plot (which came) in one of the most sensitive periods of the country’s history,” said Hemmati.

The official, however, admitted that US sanctions had caused difficulties for the Iranian households through the shocks they created in the markets and the increased inflation that followed.

Iran reports lower inflation in the month ending July 22 as the rial bounces back against the dollar.

Iran has been faced with some of the harshest sanctions ever imposed on a country after US President Donald Trump  withdrew from a major international agreement on Tehran’s nuclear program in May last year.

The sanctions began in November and were toughened in May this year after Trump’s administration cancelled waivers granted to several major buyers of Iran’s oil.

However, official data released by the government this week showed that consumer inflation had started to decline in the month ending July 22.

The surge of the Iranian rial and the declined inflation comes despite renewed military tensions in the Persian Gulf where Iran has refused to release a British tanker it seized last Friday in retaliation for Britain’s seizure of an Iranian supertanker earlier this month in its overseas territory of Gibraltar.

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IRAN NEWS ECONOMIC DESK

He noted in a post on his Instagram page that the INSTEX is only a limited part of the central bank’s strategy in the foreign exchange market, and several other programs are being implemented in the field of foreign exchange ties.

“While the operational infrastructure of a mirror Iranian mechanism, named STFI, proportionate to the INSTEX has been thoroughly completed by the Central Bank, reports signal Europe’s speeding up of efforts to make the INSTEX operational,” said Hemmati.

“The INSTEX must work within the framework of the JCPOA and not based on the US sanctions regime. All of the transactions that are allowed within the framework of the nuclear deal must be feasible through the INSTEX. It may initially include all non-sanctioned goods, but then its scope should be extended to all commodities.”

Hemmati further noted that the resources of this mechanism must be supplied through oil exports to Europe, and if Europe temporarily has some excuses not to buy the Iranian oil, a long-term credit line with a future oil refinance will be an interim solution.

Iran on April 29 announced the establishment of a company designed to match a mechanism European countries have set up to facilitate trade despite U.S. sanctions.

Earlier on March 20, the Governor of Central Bank of Iran (CBI) Hemmati had announced that a mechanism similar to Europe’s Instrument for Trade and Exchanges (INSTEX) has been registered.

The mechanism, called the Special Trade and Finance Institute (STFI) was introduced after technical and expert negotiations between Iranian delegations and representatives from three European countries (Britain, France and Germany).

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IRAN NEWS NATIONAL DESK

“Of course, the enemies’ goals were much more than (creating) economic problems but we did not allow them to reach their goals,” he added.

The CBI governor further said the enemies also have secret plots to disrupt the foreign exchange market in the beginning of this year, adding that they should not be allowed to gain their goals.

Back in January, Hemmati explicated the CBI’s plans to neutralize the economic pressures and psychological war waged by the US and its allies with the aim of destabilizing Iran’s foreign exchange market.

Hemmati also said that backing domestic production is the main priority of the Central Bank of Iran (CBI) in the current year (started Mar. 21, 2019).

For this purpose, Hemmati called on all chief executives of banks to help boom production sector through granting facilities to the industrial and production units.

He made the remarks on Sunday among chief executives and members of the Board of Directors of the banks, finance and credit associations and said, “despite many ups and downs and conspiracies waged by enemies against the country, banking system of the country took effective steps and managed to solve relevant problems.”

Turning to the concentration of enemy on the Money and Foreign Exchange Market in order to attain its malicious objectives, he said, “in the past year (ended March 20, 2019), enemy had orchestrated special program in order to disrupt Money and FOREX Market but it [enemy] failed and could not realize its objective in this field.”

Hemmati evaluated activity and performance of banking system of the country in the previous year (ended Mar. 20, 2019) ‘appropriate and positive’ and added, “it is expected that banking system would be managed appropriately in the current year (started March 21, 2019) especially in the field of controlling liquidity.”

Head of Money and Credit Council also referred to the unexpected events in the early days of the current year and added, “unfortunately, a great number of people faced serious problems in the wake of devastating flood in most provinces of the country.”

He promised flood-hit people across the country that CBI will make its utmost effort to solve problems facing these people through offering necessary facilities and loans.

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“Failure of the US policy of sanctions is practically materializing, and its outcomes are emerging in the form of a shift in Iran’s trade structure,” he added.

Hemmati also described the elimination of US dollar from Iran’s foreign trade exchanges as a major result of the new trade strategy.

The CBI chief noted that Iran has been handling trade exchanges with Iraq through a special payment system.

Heading a high-ranking delegation, Rouhani arrived in Baghdad on Monday at the official invitation of the Iraqi government. It was Rouhani’s first official visit to Iraq during his tenure.

In a meeting co-chaired by Rouhani and Prime Minister of Iraq Adil Abdul-Mahdi in Baghdad on Monday, top officials from the two countries signed five memoranda of understanding.

The documents entail cooperation between Iran and Iraq concerning the Basra-Shalamcheh railroad project, visa facilitation for investors, cooperation in the health sector, and agreements between the Ministry of Industry, Mines and Trade of Iran and Ministry of Trade of Iraq, and another one in the field of oil between the petroleum ministries of the two countries.

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Abdolnaser Hemmati on Wednesday held a meeting with presidents of Iraqi banks, members of Iraq’s chamber of commerce and the Arab country’s business people during a trip to Baghdad.

In the gathering, the top Iranian banker unveiled a new mechanism to continue Iran’s trade with Iraqi businesses, saying the CBI is going to open euro and dinar-based accounts to process transactions for trade in oil and gas.

Describing Iraq as Iran’s major partner, Hemmati said the two countries have agreed to make the banking ties much stronger.

“According to the agreements, Iranian exporters should be able to continue activities via Iraqi banks, and Iranian banks could also open dinar accounts in Iraqi banks.”

He also stated that Iraqi companies can reciprocally open accounts in Iranian banks and conduct transactions in dinar.

In December 2018, Chairman of Iran-Iraq Chamber of Commerce Yahya Ale-Eshaq said the central banks of Iran and Iraq were finalizing negotiations to begin trade in their own currencies.

Iraq’s Foreign Minister Mohamed Ali Alhakim has made it clear that his country cannot cut off trade ties with Iran under the US sanctions, saying the value of annual trade between Iran and Iraq amounts to $12 billion.

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According to Abdolnaser Hemmati, CBI’s Money and Credit Council has approved two major foreign currency exchange mechanisms, the first is formation of ‘an organized market for foreign currency exchange and related trades’ and the second is preparation of ‘instructions about letting customers open rial-based accounts relying on foreign currency’.

“At the organized market, foreign currency exchanges will be done in cash and in an electronic framework, relying on the approved regulations,” Hemmati announced.

“In rial-based accounts, the CBI utilizes the made accounts of its customers for making foreign currency investments,” he wrote, “the exchange rates for opening such accounts are daily set at CBI’s online Sana system (accessible at sanarate.ir, a website that records daily forex trade from across the domestic exchange bureaus).”

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