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The Central Bank of Iran (CBI) has announced new regulations authorizing Iranian commercial banks to engage in foreign currency trading on the parallel free market, which was previously restricted to foreign exchange bureaus. The measures are a bid to capitalize on the lifting of international sanctions in January. However, major structural faults in Iran’s banking system may obstruct implementation of reforms.
The new regulations, which came into effect on 1 August, are intended to speed up the unification of the two-tier foreign exchange system in the country and move towards a floating exchange rate system. CBI Governor Valiollah Seif, who expects to see a unification of the two-tier system by March 2017, said that commercial banks can now buy foreign exchange from their clients and trade at the free market rate. Exporters can also sell their forex earnings to banks or deposit them in their foreign currency accounts at their banks.
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