The Central Bank of Iran (CBI) has decided to bring home some of its deposits in foreign banks, its governor said Monday, saying the funds were needed in Iran.
“The CBI decided to lower the volume of its foreign deposits and transfer them inward by depositing them at domestic banks,” the state news agency quoted Governor Mahmud Bahmani as telling a banking seminar. He did not say how much money was being brought home.
“It was agreed these deposits should be used to meet the financial needs of domestic projects through hard currency rather than rials so that the domestic inflation rate would not be aggravated,” he said.
That wasn’t clear. If the money were to be spent in Iran, it would have to be converted into rials, which would aggravate inflation. If the money were to be used to buy foreign goods, there would be no need to repatriate it.
In August, Bahmani said Iranian assets had been withdrawn from European banks in an attempt to foil the sanctions that threatened to freeze Iran’s funds in Europe. Presumably, Bahmani was talking about bringing money home now from Asian banks.
Reuters news analysts said the repatriation might indicate concerns about Iran’s ability to access its cash due to sanctions or a need for more hard currency in Iran to pay for investment projects, some of which have suffered from the withdrawal of foreign companies under sanctions pressure.