News / Economy

Iran president orders single forex, lower lending rates

Saturday, 13 February 2016 10:16 AM [ Last Update: Saturday, 13 February 2016 10:34 AM ]

Iranian President Hassan Rouhani gestures before starting to address a banking forum in Tehran on February 13, 2016. (president.ir)

Iran must unify multi-tiered foreign exchange rate and cut lending interest rates as part of post-sanctions plan to prop up the economy, President Hassan Rouhani says.

“Forex rate must be unified next [calendar] year (starting March 21) so that stability in the market will be bolstered and corruption will be stopped,” Rouhani told a banking forum on Saturday.

He stressed the necessity of cutting lending interest rates, saying: “After the administration curbs inflation and [cuts it to] a single-digit rate, high banking interest rate would be incorrect and will harm the economy.”

Rouhani said Iranian banks have to step up their efforts in favor of national economy now that international sanctions have been lifted on Iran. Interest rates offered by Iranian banks are set at 20% for long-term deposits and at lower floating rates for short-term accounts.

Iran’s national currency, the rial, has been traditionally traded at two rates one being traded by CBI and the other one set by money changers.

On Saturday, the US dollar traded for IRR 30,180 at official rate and for IRR 35,060 on open market.

The rial depreciated 60% against the US dollar since the end of 2011 when the US and its allies started imposing anti-Iran sanctions.

Governor of the Central Bank of Iran (CBI) Valiollah Seif said last month that $28 billion of Iran’s unfrozen assets would go to the central bank and $4 billion will be transferred to the state treasury as the share of the government.

Rouhani also said that his administration’s “financial and money discipline” has contributed to curbing the country’s runaway inflation rate.

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