{"id":256603,"date":"2022-03-08T07:25:20","date_gmt":"2022-03-08T12:25:20","guid":{"rendered":"https:\/\/www.ncr-iran.org\/en\/?p=256603"},"modified":"2023-02-04T02:20:27","modified_gmt":"2023-02-04T01:20:27","slug":"official-exchange-rate","status":"publish","type":"post","link":"https:\/\/www.ncr-iran.org\/en\/news\/economy\/official-exchange-rate\/","title":{"rendered":"Iran: Hastily Approval of Removing Official Exchange Rate and Its Consequences\u00a0"},"content":{"rendered":"
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File Photo: A scene of the Iranian regime’s so-called parliament<\/figcaption><\/figure>\n

After months of <\/span>the <\/span>flip-flop, the Iranian regime\u2019s parliament hastily approved eliminating the official exchange rate of 42<\/span>,<\/span>000 rials for a dollar as a part of Ebrahim Raisi\u2019s budget plan<\/a> for 2022-2023. <\/span>The move came following <\/span>endless debates and different warnings by regime officials about<\/span>\u00a0the consequences of this decision<\/span>,<\/span> such a measure was <\/span>wrapped up in less than <\/span>2<\/span>two<\/span> minutes!<\/span>\u00a0<\/span><\/p>\n

\u201cThe parliament got tired after 15 days of reviewing the plan to eliminate the official exchange rate, and you exploited this situation to approve the removal of the official exchange rate in two minutes. <\/span>The p<\/span>eople’s ever-shrinking tables would demonstrate the impact of this decision. At the same time, the government will not fulfill its obligations,\u201d Alireza Pak Fetrat, MP from Shiraz, said on March 6, <\/span>according<\/span> to the state-run ISNA News Agency<\/a>.\u00a0<\/span>\u00a0<\/span><\/p>\n

In response, Mohammad Bagher Ghalibaf, the parliament speaker, acknowledged that <\/span>it<\/span> ha<\/span>s<\/span> been<\/span> \u201c<\/span>the<\/span> Majlis [parliament]<\/span> had been assessing this plan<\/span> for <\/span>three months<\/span> that Majlis [parliament]<\/span> been assessing this plan<\/span>.\u201d\u00a0<\/span>\u00a0<\/span><\/p>\n

According to the semi-official ISNA News Agency on March 6, the regime\u2019s parliament has authorized Ebrahim Raisi\u2019s government \u201cto remove the official exchange rate on the condition <\/span>to <\/span>that it will <\/span>provide the necessary <\/span>re<\/span>sources for compensating the difference for <\/span>the <\/span>import of basic goods, medicine, and medical equipment.\u201d\u00a0<\/span>\u00a0<\/span><\/p>\n

Hossain Noshabadi, a member of the <\/span>Majlis <\/span>National Security Commission, claimed on March 6 that Raisi\u2019s government would allocate 250,000 trillion rials in the form of electronic coupons, or $9 billion based on the current exchange rate to help people and control another currency shock.\u00a0<\/span>\u00a0<\/span><\/p>\n

While rejecting this claim, Alireza Beigi, regime\u2019s MP from Tabriz, <\/span>told<\/span> the state-run Setar-e Sobh daily<\/a> that \u201cRegarding the electronic coupon, I must say that we have not yet incurred the costs and the government has not decided in this regard.”<\/span>\u00a0<\/span><\/p>\n

\u201cThe sudden removal of the official exchange rate is harmful and could result in many problems for people. Many of the essential goods are imported using this rate. Suppose the government suddenly removes or suspends the official rate. In that case, people will have a problem making a living<\/span>,\u201d Mohammad Reza Rezaei Kochi, Chairman of the Civil Commission of the Parliament, <\/span>told<\/span> the state-run Mehr news agency<\/a> on March 7.\u00a0<\/span>\u00a0<\/span><\/p>\n

The official exchange rate was introduced in 2018 by Hassan Rouhani\u2019s government to control the fluctuating currency rate. Eshagh Jahangiri, Rouhani\u2019s vice president, first announced the existence of 42<\/span>,<\/span>000 rials <\/span>for <\/span>a dollar exchange rate. Thus, the rate is also known as \u201cJahangiri\u2019s currency.\u201d\u00a0<\/span>\u00a0<\/span><\/p>\n

The so-called \u201cPreferred currency\u201d was supposed to be used to import the country\u2019s essential materials, most notably\u202ffood\u202fitems and medicine. Many economic experts\u202fconsidered this as\u202funofficial\u202fsubsidies intended\u202fto control the prices of essential goods. Yet, the regime\u2019s insiders used the official rate to import\u202fluxury\u202fgoods\u202fthat\u202fordinary Iranians could not afford.\u202f\u202f<\/span>\u00a0<\/span><\/p>\n

Since the Rouhani government did not have enough currency, it started banknote printing, thus increasing liquidity. The rising liquidity was in line with Iran\u2019s low production rate of 3%, so inflation soared, and prices skyrocketed.<\/span>\u00a0<\/span>\u00a0<\/span><\/p>\n

\u201cIn 2019 alone, around $15 billion [based on the official exchange rate] was spent on importing various items,\u201d\u202fwrote\u202fFars News Agency on November 7, 2021. \u201c<\/span>Besides all this fuss, <\/span>Rouhani\u2019s government was virtually incapable of controlling prices. Surveys show that based on the free-market exchange rate in that year, the importers embezzled around 5.1 quadrillion rials.\u201d<\/span>\u00a0<\/span><\/p>\n

According to\u202fProfessor\u202fHamed\u202fNajafi\u202fAlamdarlo\u202fof\u202fTarbiat\u202fModares\u202fUniversity, \u201cEstimates show that from 2018 to September 2021, about $46 billion in foreign exchange resources has been allocated to [importers]\u201d to preserve the official exchange rate of 42,000 rials for $1.\u202f\u202f<\/span>\u00a0<\/span><\/p>\n

\u201cCorruption due to this currency is estimated at 5.9 quadrillion rials. It should be noted that the total development budget for 2021-2022 is about 1.4 quadrillion rials,\u201d he added, according to the state-run Keyhan daily on November 10<\/span>.\u202f<\/span>, 2021.<\/span>\u202f\u202f<\/span>\u00a0<\/span><\/p>\n

Raisi intends to remove the official exchange rate, so he can direct the regime\u2019s limited resources to the export of terrorism, fueling proxy wars and keeping the regime\u2019s oppressive apparatus on foot.\u00a0<\/span>\u00a0<\/span><\/p>\n

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Iran: Raisi Adamant on Removing Official Exchange Rate, MPs Warn of Consequences#Iran<\/a> #economy<\/a> https:\/\/t.co\/hgkMs0LvAi<\/a><\/p>\n

— NCRI-FAC (@iran_policy) February 4, 2022<\/a><\/p><\/blockquote>\n