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Iran subsidises exchange rates for half its imports
April 5, 2012 / 1:42 PM / 6 years ago

Iran subsidises exchange rates for half its imports

DUBAI, April 5 (Reuters) - Iran’s government will provide subsidised foreign currency for around half of all goods imported into the country this year, according to a state news agency report on Thursday, after new sanctions against the state slashed the value of its rial.

The country’s central bank banned free market trading in currency in January, seeking to fend off soaring inflation and further devaluation spurred by international sanctions imposed against Iran’s financial and energy sectors.

Over $30 billion would be made available by the government to importers at the fixed rate, based on the previous year’s figures for imports, state news agency IRNA quoted a trade official as saying.

“On average, of the total imports into the country, around half consist of raw materials, automobile spare parts, intermediary machinery and the like,” said Kiomars Fathollah Kermanshahi, deputy director of the state-run Trade Promotion Organisation.

The rial lost 30 percent of its value within weeks after the United States and its allies imposed additional sanctions, seeking to force Iran to abandon uranium enrichment activities which they suspect are part of a programme to develop nuclear weapons. Iran maintains its nuclear goals are purely peaceful.

Targeting Iran’s banking industry has made it difficult for the country to pay for basic foods through the global banking system, even though foodstuffs themselves are not subject to sanctions.

The central bank introduced an official rate of 12,260 rials to the dollar in January. However, last month the central bank said the rial could again be traded at free-market rates after some importers complained about being unable to buy foreign currency. They can now purchase dollars legitimately but at a more expensive rate - currently around 19,000 rials.

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