Iran’s national currency has recently regained 10 percent of its value after the Central Bank of Iran (CBI) injected $2.5 billion into the market in recent days.
Last week, the CBI Governor Abdolnaser Hemmati said, that $2.5 billion in export revenues had been re-injected into the NIMA system [Persian acronym for Consolidated System of Forex Transactions] over the past ten days to control the turbulence in the market.
According to CBI statistics, in the first four months of the current Iranian calendar year which started on March 21, the government had only introduced around $5 billion to the system where importers procure their currency.
The Iranian Central Bank has always tried to control the forex market by injection of foreign currencies but in recent months due to the massive drop in Iran’s oil sales, it has failed to prevent the devaluation of the national currency. According to Hemmati over the past 15 years, the CBI has injected around $280 billion, about $18 billion a year, to regulate the forex market.
The rates for other foreign currencies such as euro, UAE dirham, Chinese Yuan, Turkish Lire, and Indian Rupees also dropped, in some cases even more than the dollar which could indicate that the CBI has injected large sums of these currencies into NIMA system rather than dollars. Around 70 percent of Iran’s imports are from China, the UAE, Turkey, India and Germany.
Therefore, the $2.5 billion announced by the CBI governor is the total sum of dollars and the equivalent of other currencies which the CBI usually makes available to importers in the NIMA system.
At the beginning of the current Iranian calendar year in late March, the dollar traded against 160,000 rials but in mid-July, the rial dropped to 260,000, the lowest it had ever experienced. This meant a nearly 70 percent devaluation of the national currency.
The rate then rose again to around 210,000 after the injection of about $1 billion to the NIMA System from July 18 to July 24.
The pumping of $1 billion could not keep the rate down for more than a few days and high demand in the market, mainly from importers, had pushed the rates up again.
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