Iran's central bank won’t bite off more than it can chew
Despite broad support for the unification of foreign exchange rates in Iran — and the central bank’s announcement of such a move in the near future — realities on the ground make such an endeavor unlikely anytime soon.
TEHRAN, Iran — Most economists and monetary policymakers in Iran have been supportive of getting rid of the country’s dual foreign exchange rate system by as soon as March 20, 2017, when the current Iranian fiscal year comes to an end. However, there appears to be a gulf between what the Central Bank of Iran (CBI) wants to do and what it is actually able to do. Indeed, the repercussions of a single rate system offers insight into why the CBI has so far resisted calls on it to unify the official and open market rates.
As I noted in Al-Monitor last year, the government must address a series of challenges before a final decision is made on the issue. These issues include the fragile nature of economic growth, the low level of nonoil exports and the vulnerable state of domestic manufacturers.
