Why Iran’s currency repatriation rules threaten rising exports

Al-Monitor | : When the administration of President Hassan Rouhani fixed the exchange rate of the Iranian rial against the US dollar back in April — an ultimately failed effort to curb the free fall of Iran’s national currency — it also revived a controversial mandatory currency repatriation policy. The initiative, which obligates exporters to bring home their hard currency revenues through designated channels, may yet prove perilous.

Private sector businesses are less than happy with a regulatory stance that forcefully tells them where to redirect their hard-earned money. But, at the same time, it is difficult to argue that export yields — a major source of hard currency revenues under extraordinary conditions defined by reimposed US sanctions — should flow outside the country. So top private sector representatives, namely those of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA), have been vocal in their support for hard currency repatriation. They have also fiercely opposed — to no avail — what they perceive to be faulty mechanisms adopted by the Central Bank of Iran (CBI) that will end up hurting exports, and especially exports to Iran’s neighbors.

“It is the stance of the ICCIMA that export yields must be repatriated and be used to cover legitimate purposes, including imports,” ICCIMA Deputy President Pedram Soltani told Al-Monitor. “But where we diverge from the CBI concerns its belief that exporters’ yields should be dealt with using the artificially low rates maintained in NIMA.”

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