January 25, 2019
The rial continues to be erratic against the US dollar, but in a narrower range than a few months ago. The dollar on the open market has been selling for from 100,000 rials to 120,000 rials the last two months. On the market reserved for businesses to buy dollars, the spread has been mostly between 80,000 and 100,000 rials.
But the price can still jump or drop by unusually large amounts on any single day—especially on the Nima market reserved for importers to buy dollars from exporters. There the price jumped 15 percent from January 2 to January 3 and dropped 9 percent from January 12 to January 14. Currency markets around the world rarely have such big swings.
What’s more, Nima clearly has problems getting enough dollars. Since the Central Bank began posting daily price averages in September, there have been 93 market days and 16 of them have reported no sales. The large jumps and drops on the chart suggests that often there are only a handful of sales, or even just one or two, per day. The Central Bank complains constantly that even though exporters are required to sell most of their foreign currency earnings on Nima, many—and perhaps most—are not doing so.
The open market price has not been anywhere near as erratic from day-to-day, but a price range of 100,000 to 120,000 is still not normal elsewhere around the world. What’s more, the prices published by currency websites vary each day. For example, on January 17, Mesghal gave the average dollar price as 113,520 rials, while Sanarate (run by the Central Bank) said it was 114,088 rials, 2gheroon reported 115,900 and Bonbast (perhaps the most used website) said 119,000. That’s a range of 4.8 percent. (Our chart shows the rates published by Bonbast and Sanarate.)
Meanwhile, on January 9, the Money and Credit Council, chaired by the governor of the Central Bank, published a new set of rules to govern the open market in foreign currencies. It is just this constant finagling with the rules that drive businessmen up the wall. There is no stability in regulations. In the United States, businessmen commonly complain that there are too many regulations. In Iran, they complain that the rules change from day-to-day with no advance warning.
Central Bank Governor Abdolnasser Hemmati said his goal with the new foreign exchange rules was to improve “transparency,” a word that has come to dominate public policy discussion for the last two decades—but without any signs that it really has any impact on reality.