The same “money-moving network” serves the currency exchanges between the Iranian rial and hard currencies. The NIMA rate was introduced by the CBI as the Iranian government anticipated the Trump administration’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA), which it did on May 2018, followed by the re-imposition of sanctions, which have hit the Iranian economy, businesses, and people harder than ever.Ĭurrently, Iranian businesses have to navigate the official rate, the NIMA rate controlled by the CBI, and the floating market rate. ![]() Rather, it has created new survival challenges for Iranian businesses. Introduction of a third exchange rate in April 2018, a so-called Forex Management Integrated System ( NIMA), has not made Iran’s international trade and access to hard currency much better. The imbalance between the two rates quickly brought inefficiencies to Iran’s international trade activities that have persisted for decades. Since the early days of the Islamic Republic, business and financial players faced the challenge of dealing with, at least, two significantly different rial exchange rates when conducting international activities: the official rate that is defined and subsidized by the Central Bank of Iran (CBI) and a floating one controlled by unregulated market supply and demand. The importance of the private sector in creating jobs and helping ordinary Iranians survive-in addition to providing communities with required products and services-should not be underestimated. Private companies are directly or indirectly dependent on international trade by being engaged in the export supply chain or being consumers of imported goods or both. The latter will most likely not make any difference for Iran’s economy unless supported by economic reforms and removed sanctions.Ĭontrary to a common misperception outside Iran, the private sector is the largest employer in the country. The government has sought to disguise and compensate for this drop by creating multiple exchange rates and, in its latest gambit, a plan to phase out the rial altogether, knock off four zeros, and issue a replacement currency-the toman. Consequently, the Iranian rial has precipitously been devaluating and has fallen from seventy rials to the dollar in 1979 to 165,000 rials, today. On top of all of this, US re-imposed sanctions have crippled Iran’s access to the international financial system and market. Furthermore, the country is beset with domestic, political, and social turbulence, as well as mismanaged and flawed economic policies implemented by inexperienced politicians and government officials. ![]() The Iranian economy has been struggling since the establishment of the Islamic Republic in 1979 for a number of reasons, including the government’s hardline foreign policies that challenge major world powers and their tensions with other countries in the Middle East.Ī devastating eight-year war with Iraq still consumes a portion of the country’s financial resources. ![]() Iran’s economy and the burden of multiple exchange rates
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