Why Iranian Currency is still there, not growing ?

[Oracle]

Havent changed a cent after lifting embargo

 

[Arminkh]

Havent changed a cent after lifting embargo

It took 10 years to get there and has more to do with consumer confidence than anything else.

The law of supply and demand works here as well. One has to think: If Iran was sanctioned and could not do any dollar transactions or buy anything in the international market, then the demand for Dollar in Iran should have decreased and so its value against Rial, right? No, it still increased the demand as Iranians were seeking a safe heaven by buying two things: US Dollar and Gold.

So in my mind, you won't see any changes until Iranians start to feel comfortable about the stability of the nuclear deal, i.e. make sure that it is there to stay and Iran's economy is on its way back to recovery. Only then, they will let go of their purchased dollars and gold and/or buying anymore quantities. Then demand will decrease and as a result Iran's currency will appreciate.

Same is true outside Iran. The other investors should feel comfortable about Iran's economy in order to start buying Iran issued bonds and etc.

It will take at least a couple of event-less years for that to happen.

 

[mohsen]

because sanctions haven't lifted yet. for example swift sanction has been removed on paper, but no foreign bank accepts our swift messages.
also our import has increased by 92% during 2 years of Rohani's presidency which obviously will have a direct affect on currency exchange rate.

 

[Madali]

Its more complicated than that. It actually should be even lower than it is now, because it was in this range when oil was 120 USD, and its still the same (more or less) when oil is 30 USD.

Also, keep in mind, what many people don't understand is that the higher value of Iranian Rial is TERRIBLE for the government & the local economy. Currently, a barrel of 30 USD oil will give us 1,050,000 IRR. Now imagine if Iranian currency is strengthened by 50%, then that same oil will give us 525,000 IRR, so suddenly oil is worth less for us. Remember the government sells oil in USD and spends it in RIAL. That's one of the ways we survived the sudden sanctions. With the oil being sanctioned, we just had to devalue the rial to be able to ride it out.

Now another big advantage is that it helps the Iranian exports. One thing that many people don't seem to understand is that when Iranian Rial suddenly was devalued by 75%, Iranian manufacturing suddenly had a boom in business! An example was an Iranian electronics called Pars Khazar. They were competing with brands like Samsung and LG, and suddenly those brands had an increase of 300% price increase while Pars Khazar prices either remained the same or had much less of an increase. Suddenly they were selling many more items that they ever had.

One of the biggest disadvantage when it comes to devaluation of the local currency is when the local businesses or governments have international loans. If you have to pay back 10 billion, and your currency is devalued, you have to have to earn more rial to pay able to pay that 10 billion. But Iranian government nor businesses have any significant loans. If anything, the government owed local businesses so their local loans just got cheaper.

High currency helps the import business, because suddenly foreign items become cheap, which is not really useful for a country like Iran at this particular moment of its progress.

Therefore, it would be an absolute terrible decision if the government ALLOWS the currency to strengthen. I'm sure if even demand is there for Rial, the government would try to suppress it. What Iran needs now is stability in the short term to bring business confidence, and then slow weakening of the Iranian currency (a 10% annual should be fine and won't bring shock to the market)

 

[scythian500]

because sanctions haven't lifted yet. for example swift sanction has been removed on paper, but no foreign bank accepts our swift messages.
also our import has increased by 92% during 2 years of Rohani's presidency which obviously will have a direct affect on currency exchange rate.

No the swift is connected and Saman Bank was the one that I sent my first post-sanctions wire

 

[Madali]

No the swift is connected and Saman Bank was the one that I sent my first post-sanctions wire

Are you sure Saman does it through the bank? We spoke to 3 banks and they all said no, one of them said that they do bank transfers but it is done through a 3rd party company.

 

[mohsen]

No the swift is connected and Saman Bank was the one that I sent my first post-sanctions wire

read this dear, Saman and a few other banks have never been under swift sanction. but the important banks and important transfers are still waiting!
خالی‌بندی سوئیفتی و تشدید تحریمهای پولشویی

 

[scythian500]

Are you sure Saman does it through the bank? We spoke to 3 banks and they all said no, one of them said that they do bank transfers but it is done through a 3rd party company.

Yes, I asked one of their branches is Mashhad, if the SWIFT is reconnected and they send wires to Europe and the guy in charge was positive so I wired a few thousands. @mohsen SB was negative last time I was there to wire (around Mehr)... I'm not sure of they were connected or not but they did it this time.

 

[mohsen]

هنوز امکان انتقال ارز برقرار نشده/ خبر هفته پیش بانک مرکزی انتخاباتی بود

عضو هیئت نمایندگان اتاق بازرگانی تهران با بیان اینکه با وجود سفرهای متعدد هیئت‌های تجاری به کشور هنوز هیچ سرمایه‌گذاری واقعی در کشور انجام نشده است، گفت: در حال حاضر هنوز مبادلات بانکی ایران با کشورهای اروپایی برقرار نشده است.

فاینانس و همکاری مالی با ایران منوط به رفع تحریم‌های اولیه آمریکاست

removing swift sanction was a simple lie.