TEHRAN, Iran, Feb.8
Trend:
The Central Bank of Iran (CBI) is using open market operation to manage the interest rate, said CBI Governor.
"The open market operation has passed the primary and pilot stages in past two weeks, it is a complex mechanism that the CBI will gradually explain. It works with businessmen in the market," said Abdolnaser Hematti on his instagram account, Trend reports citing IRNA.
"The mechanism would control the interest rate fluctuation and will be used in pricing policy in banks. Trading government security bonds will be done in this market as well," he added.
"When the interest rate is more than pricing, the Central Bank of Iran would purchase bonds and increase money supply. When the interest rate is lower than pricing policy the CBI would sell the bonds and reduce money supply," he said.
"The interest rate ceilings and floors has been defined by the Central Bank of Iran to create stability in trades between banks," he added.
"The CBI intervenes in the market when the pricing policy has a considerable gap. The intervention would be in form of buying, selling, repurchase or counter purchase," he said.
The official has advised businessmen and banks to transform their non-cash assets into public bonds to be more active in interbank market.