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Iran: Parity Rates Unchanged; Exporters Oppose Reevaluation

Source: Iran Daily


Parity rates for foreign currencies will remain unchanged in the budget law for the next Iranian year (March 2008-09 fiscal year), announced economy minister.

Davoud Danesh-Jafari added that the value of the national currency against the US dollar will be between 8,950 and 8,900 rials, IRIB reported Wednesday.


Useful studies have been conducted to strengthen the value of the rial against foreign currencies, he stated, adding, "The government has not taken decision on this."

The Majlis Research Center is currently studying a proposal to strengthen the national currency against the greenback.
The proposal which was initially brought up in the Money and Credit Council is aimed at fighting inflation which was above 17 percent during the 12 months to December 21.

The initiative proposes raising the rial's value against the US dollar to 7,000 rials from the current central bank rate of less than 9,400 rials.

Meanwhile, exporters believe that ratification of such proposal is unlikely. "It is unreasonable to reduce the value of dollar against rial to rein in the double-digit inflation," Hossein Salimi, a member of Iran Chamber of Commerce, Industry and Mine (ICCIM) said.
Strengthening of the rial would reduce the cost of importing raw materials but it would have adverse impact on export.

"The move would certainly benefit imports and have some influence on inflation but by it would also lead to destruction of domestic industries and worsen unemployment by making exports cheaper."

Danesh-Jafari also confirmed that exporters favor higher value of dollar against the rial which is more profitable for them.
However any decision should benefit the national economy, the minister observed.

"When a country seeks stability in rate of foreign currencies, it means to have a balance rate taking into account the inflation at home and in the world."

He explained that if global inflation rate stands at five percent and domestic one at 15 percent, this means nominal rate of foreign exchanges should increase by 10 percent.

"While at present and in recent years as well, value of dollar has risen less than 10 percent and euro between one and two percent."
Moves have been taken in recent years to strengthen rial against other currencies but this should be based on 'real', not 'nominal', value of rial, he concluded.

... Payvand News - 01/24/08 ... --

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