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Iran To Force Exporters To Repatriate Their Hard Currency Earnings Amid Devaluation

A money exchange bureau in Tehran's Ferdowsi Ave where most exchange bureaus are located. FILE PHOTO.

Iran's Central Bank Governor Abdolnaser Hemmati on Sunday said exporters who have not transferred their foreign currency earnings to the government FOREX system will be summoned for explanations.

In a note about the reasons for the drastic devaluation of the national currency, Hemmati said that the deadline for declaring foreign currencies received from exports was two weeks ago and cannot be extended. Hemmati threatened exporters with summons, in cooperation with the country's Judiciary.

On Sunday Mohsen Zanganeh, a lawmaker and member of the Parliament's Planning and Budget Committee, said exporters had kept $20 billion earned from exports outside the country. According to Zanganeh, exporters say they need the government to give them certain guarantees before they transfer the currencies back to Iran.

Traders and shopkeepers laugh as people storm the Ferdowsi Archade, a center of foreign exchange bureaus in central Tehran on July 6, 2020.

Sanctions imposed by the United States have stopped 90 percent of Iran’s oil exports and tens of billions of dollars in foreign currency revenues. The government is desperate for U.S. dollars and other major currencies. This is the reason for pressure on exporters to repatriate their hard currency earnings.

Exporters keep their money in foreign banks rather than transferring it back to the country because of lack of confidence due to Iran's economic crisis and the huge devaluation of its currency.

The regulations introduced by the government require exporters to transfer the foreign currencies they receive from their customers to the newly introduced government FOREX system knows as Unified FOREX Transactions System (NIMA) where it would be used to meet the foreign currency needs of importers.

The government said the purpose of the new policy was to direct imports into legal channels, ensure sufficient and fair amount of foreign currencies to importers on a priority basis (essential commodities first) as well as prevention of hard currency smuggling and money laundering.

The Iranian currency rial fell to new lows against the U.S. dollar on Sunday at Tehran’s exchange market, going above the 220,000 rial to the dollar mark, up from 210,000 a day earlier. The euro traded at 247,950 on the same day.

Iranian officials say the huge devaluation of the rial is temporary and attribute it to enemies' "psychological operations against Iran to cause people and traders to worry".