Problems relating to Trade and Investment on Iran
12. Exchange controls |
|||
Issue |
Issue details |
Requests |
Reference |
| (1) Tightened Foreign Exchange Control | - In August 1980, acquisition of approvals has been made necessary, issued respectively by the Plan and Budget Office (PBO), Ministry of Economic Affairs and Finance (MEAF), General Administrative Agency (GAA), Ministry of Commerce (MOC), and CBI to open Letters of Credit (L/Cs). - Since March 1992, Regulation has been enforced, necessitating CBI's approval on L/C extension, etc. - Since October 1993, MOC's approval has been required on all foreign exchange transactions including opening of L/Cs. - Since 1994, GOI has strictly controlled imports, making any imports not made though Iranian financial institutions unlawful, in principle. Simultaneously, any import made corresponding to exports has been severely restricted. - Since about the end of 1997, the number of L/Cs opened at sight terms has increased and from the beginning of this year, 90% or more of L/Cs have been opened with "at sight" terms. The rate of foreign exchange has been fixed at US$1.00= IR3000, while the floating rate at US$1.00=IR1750 has been applied to import necessities of life. - In March 1999, export foreign exchange rate of US$1.00= IR3000 was discontinued. - Since March 2000, the foreign exchange transaction has begun at Teheran stock exchange. - In the middle of 2001, the preferential import rate of US$1.00=IR1750 was discontinued. - Since March 2002, the foreign exchange rate has been harmonised to the current rate to achieve sound economy, and notional finance reflecting the improved foreign currency reserves and deregulating import restrictions. - Since December 2006, GOI has discontinued opening of L/Cs in US dollars. |
||
| (Action) - The method of acquiring foreign exchange: Commercial banks. The name of domestic currency: Real. A. Designated Currency: EURO, Australian dollars, Canadian dollars, Japanese yen, Norwegian krone, British pound sterling, Swedish krona, US dollars, Danish krone, Swiss franc, etc. B. Since December 2006, GOI discontinued opening of L/C in USD. (Source: Economic Commission Decree No.309/198528 promulgated on 13 December 2006). |
|||
| (2) Confused Information on Foreign Exchange System | - It takes a long time before release and implementation of the new foreign exchange system. Prior to its announcement, due to the spread of mixed speculative information, the market confusions get accelerated. | - It is requested that GOI takes positive measures to improve the chaotic conditions. | |
| (3) Large Price Jump on Imported Transport Equipment Products | - Central Bank of Iran (CBI), by its Directive in August 2012, removed from the scope of the previous CBI reference rate, the import of CKD for transport equipment including cars, so that the rate of exchange closer to the market rate under Ministry of Commerce (MOC) applies. Consequently, it has driven up dramatically the import prices, causing the severe decline in imports from Japan. | - It is requested that GOI applies the fair CBI reference rate. | |
| (4) Rapid Exchange Fluctuations | - Radical exchange fluctuations prevail. As it stands, member firm's subsidiary (MFS) benefits from exchange gain on a direct export transaction in yen. Nevertheless, negotiation for raise in price is difficult. In a transaction with its parent company, the prevailing Yen depreciation enables MFS to offer special prices to its customers. However, MFS runs on a thin margin, so that if the exchange rate swings toward appreciation of Yen, it will instantly show operational loss: such is the severity of the fluctuation band. | - It is requested that GOP takes step to: -- stablise foreign exchange fluctuations, and -- holds the fluctuation band within a few percents in 6-months. |
|
<<BACK |