Iran allows free foreign exchange at banks in move to unify rates

Reuters– Iran authorized some banks on Saturday to deal in foreign exchange trading at a free-market rate, the central bank said, as authorities try to unify exchange rates.

Iran operates two exchange rates, a free market rate, which was at around 40,140 rials to the dollar on Saturday and an official rate used for some state transactions, set by the central bank at around 32,300 rials.

In recent months, the central bank has raised the official rate gradually to shrink the gap between the two. It has said it wants to unify the exchange rate, to make the economy more efficient and create a level field for private firms competing with state institutions with access to cheaper foreign exchange.

A statement on the central bank’s website on Saturday said some banks were authorized to trade in foreign exchange at a “rate set by agreement between the bank and the customer” and that it would fulfill the banks’ foreign exchange requirements at the market rate.

It said the directive aimed “to channel foreign exchange operations by individuals and entities to banks and decrease their risks”.

The rial has suffered under years of economic sanctions, but the central bank has been keen to dampen any sharp rise in the currency due to optimism over the lifting of the sanctions after Iran’s nuclear deal with world powers in 2015.

(Reporting by Dubai newsroom; editing by Susan Thomas)