Iran’s Forex Center Increases Turbulence in Foreign Currency Exchange Market

Iran's Forex Center Increases Turbulence in Foreign Currency Exchange Market

Central Bank of Iran (CBI) recently opened new foreign exchange center in order to stabilize the exchange rates of foreign currencies including Dollar, Euro and Pound in Tehran’s free market. A group of analysts praised this movement and said launching of this center can reduce the price of foreign currencies in market. But other analysts say opening the new Forex center can increase the current turbulence in market.

Mohammadreza Alaghband, economist, believes foreign exchange center (also known as Forex center) is not the final and ultimate solution for currency crisis. “The principles governing the determination of exchange rates in the market have been broken over the past two years and the new Forex center is intended to fulfill the deficits of currency resources.”

CBI had announced that the exchange rate of Dollar in this center will be 2% less than free market but this number is now more than 5% and Alaghband criticizes the Central Bank over this subject. He also says this pricing mechanism of exchange rate is in favor of interest groups.

“Launching this new center was not the ultimate solution to resolve the crisis because it continues turbulence in the foreign exchange market and foreign chambers.” Mohammadreza Alaghband,¬†senior economist in capital markets, concluded.

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