CBI Sees TSE's Rial Rate Stabilising
June 7, 1999 - 0:0
TEHRAN Central Bank of Iran (CBI) Governor said he expected the rate of the rial currency quoted on the Tehran Stock Exchange (TSE) to stabilise at current levels, which he thought were satisfactory, Governor of CBI, Mohsen Nourbakhsh told Reuter. The Islamic Republic has a multi-tier exchange rate system, with an official rate of 3,000 rials to the dollar and another rate of 1,750 rials to the dollar used for special budget items.
It also has a rate mainly used by exporters selling hard cash on the Tehran Stock Exchange. The government recently allowed the bourse to set that rate. Since then, the value of the rial on the bourse has dropped to between 7,600 and 7,700 to the dollar from about 6,750 in March, but the level has been fairly steady over the past week.
The black market rate is about 1,000 rials more per dollar. "Fortunately, now (the bourse) rate is almost stable. My expectation is that after these changes in the first stage, we will have a more stable situation," Nourbakhsh told Reuter. He was speaking in Basle on Saturday ahead of Monday's annual meeting of the Bank for International Settlements. Asked if he thought the current rial level on the stock exchange was satisfactory and reflected the true value of the rial, he said: "Yes." Nourbakhsh also said the decision to let the stock exchange set the rial rate would reduce black market activity, in part because the exchange rates are more similar.
"My expectation and my impression is that with regard to the step that we have taken on the Tehran Stock Exchange, relaxing that definitely it is going to narrow down the black market," he said. Iran banned free market currency exchange in 1995, imposing the official rate of 3,000 to the dollar in a bid to stabilize the currency. The rial's black market rate has lost nearly half its value against the dollar since early last year as a slump in oil prices hit the economy.
It also has a rate mainly used by exporters selling hard cash on the Tehran Stock Exchange. The government recently allowed the bourse to set that rate. Since then, the value of the rial on the bourse has dropped to between 7,600 and 7,700 to the dollar from about 6,750 in March, but the level has been fairly steady over the past week.
The black market rate is about 1,000 rials more per dollar. "Fortunately, now (the bourse) rate is almost stable. My expectation is that after these changes in the first stage, we will have a more stable situation," Nourbakhsh told Reuter. He was speaking in Basle on Saturday ahead of Monday's annual meeting of the Bank for International Settlements. Asked if he thought the current rial level on the stock exchange was satisfactory and reflected the true value of the rial, he said: "Yes." Nourbakhsh also said the decision to let the stock exchange set the rial rate would reduce black market activity, in part because the exchange rates are more similar.
"My expectation and my impression is that with regard to the step that we have taken on the Tehran Stock Exchange, relaxing that definitely it is going to narrow down the black market," he said. Iran banned free market currency exchange in 1995, imposing the official rate of 3,000 to the dollar in a bid to stabilize the currency. The rial's black market rate has lost nearly half its value against the dollar since early last year as a slump in oil prices hit the economy.