Iran Doubles Down On Unpopular Currency Exchange Controls

Efforts to unify the two-tier exchange system without addressing underlying structural flaws are a recipe for disaster. Enforcement mechanisms have led to currency hoarding, will increase black market demand, and risk exacerbating public grievances.

Iran has launched an online integrated system intended to manage foreign exchange transactions in a desperate attempt to facilitate the unification of the country’s faulty two-tier exchange rate system.

Following the government’s decision on 9 April to unify the rial exchange rate at $1=IR42,000 after the unofficial rate sank to a record low of around $1=IR60,000 ( MEES, 13 April ), First Vice-President Ishaq Jahangiri on 23 April inaugurated the new system.

Known by its Iranian acronym, NIMA (Forex Management Integrated System), the mechanism essentially requires Iranian exporters to sell their foreign currency earnings to the domestic banking system. In turn importers place their forex orders through the system, with banks and forex bureaus serving as go-betweens. (CONTINUED - 1001 WORDS)