Tehran, Iran, Oct. 13
By Mohammad Jafari – Trend:
Iranian government and the central bank have to gradually raise the rate of foreign currencies against rial to slow down the growing trend of imports and reinvigorate domestic production instead, an expert believes.
"I agree with the rise of the rate of foreign currencies against rial, but, within a ten-year-long well-programmed plan under expert monitoring by the Iranian government and central bank," Ebrahim Razaqi, a university professor and well-known economic expert told Trend.
Razaqi said that if the relevant governmental bodies increase the price of the managed floating US dollar, the society in the country may fall into shock.
He added that vulnerable layers of the society will not be able to tolerate the impacts of such a hasty plan.
If the Iranian officials intend to get out of this malformed economy, they should raise the rate of the US dollar for the imports of luxury goods, automobiles and trips abroad, the expert pointed out.
Razaqi went on to suggest that the rate of the US dollar should not go up for the local companies that import foreign machinery and raw materials.
He said the rate of the US dollar for non-producing sector should rise up to 120,000 rials or more, but the rate for say, producing companies, should be lower.
Razaqi also noted that regarding the profitability of the domestic production, Iran's government can increase the rate of the US dollar for producing companies' imports.
"The inflation rate shouldn't be forgotten about when adopting economic policies, especially regarding the change of foreign currencies' rate," he said.
If the government puts the above mentioned monetary policy on top of its economic agenda, the country will, in a decade, witness a healthy economy whose revenues will be earned from taxes, not via crude oil exports, he said.
Valiollah Seif, the governor of the Central Bank of Iran, earlier said that the policymaking body distinguishes between temporary fluctuations and long-term trends in the foreign exchange market and closely considers this in its decision-making to ensure forex stability in the long run.
Iran's forex market has recently been experiencing volatile days. Over the past week the rate of the US dollar against Iranian rial increased by at least 1.4 percent to reach 40,062 rials.
