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Governor of the Central Bank of Iran (CBI) Abdolnasser Hemmati reassured that the country is enjoying sufficient foreign exchange reserves to deal with any possible turbulence in the currency market.
Hemmati said curbing the inflation is high on CBI’s agenda in a bid to achieve such a goal. adding that Iran has sufficient foreign exchange reserves to overcome any turbulence in the currency.
He said the government will exert every effort to improve the national economy. as a top priority urged by Supreme Leader of the Islamic Revolution Ayatollah Seyed Ali Khamenei.
Controlling the currency rate is the key step since turbulence in this market will have the worst impact on the economy.
The top banker underscored the role of the newly launched Open Market Operation and changes in the CBI monetary policy to rein in galloping inflation.
He reiterated that CBI measures. however. should be accompanied by adopting effective and supportive policies to boost the non-oil sector of the economy.
Open Market Operation is a financial instrument through which central banks buy and sell securities in the open market to expand or reduce the money supply.
Within this framework. central banks can buy government bonds to increase the money base (cash reserves) and by extension curb inter-banking lending rates. By the same token. selling government bonds reduces the base money and raises interbank rates.
It constitutes a key instrument of monetary policy under the market-based system of monetary management. Essentially. it is used by monetary authorities to regulate the cost and availability of credit in the banking system and influence the level of the money supply.
In addition. within the framework. banks can hold bonds as collateral to borrow from the CBI.
On Thursday. President Hassan Rouhani. during a visit to the headquarters of the CBI in Northern Tehran. announced the upcoming launch of open market operation (OMO) policies in the country’s banking system. to improve CBI’s control over the capital flow in the country.
Last month. President Rouhani said that the country`s budget bill for the next fiscal year had been set in a way to offset the negative effects of the US sanctions and. hence. includes a significant cut in oil revenues.
Our budget for the next year. like the current year. will be based on resistance against sanctions. the budget’s message is that we will manage the country despite all sanctions. Rouhani said in an open session of the Parliament in Tehran.
Next year’s budget is not much reliant on oil. Anticipated revenues for oil and gas sales are close to the required budget for civil projects. he said. adding that 700 trillion rials (some $5.3 billion) have been allocated to such projects.
Rouhani was at the Parliament to submit the next year’s budget bill.
We were under the toughest sanctions last year. we promised that the administration. with the support of the resistant Iranian nation and other organizations. would make every effort to provide and implement the budget and this has been realized by now. Rouhani said.
Nine months have passed since the start of the local calendar year of 1398 and all the daily budgets have been provided. he said. adding that 340 trillion rials (some $2.6 billion) have been allocated to civil projects. Major projects have either been inaugurated or will be by the year-end.
All this has been realized while Americans and Zionists thought that sanctions would cripple the government. but they gave up on that and will keep being disappointed in the future. Rouhani said.
In October. Hemmati announced that the country has further reduced its reliance on oil revenues to bring the share of the income earned though crude sales in the budget to less than 30 percent.
Oil has had the major share of production and exports in Iran’s economy for 50 years. but today less than one-third of the exports is related to oil. Hemmati wrote on his Instagram.
He reiterated that Iran’s economic growth had been greatly affected by the oil sector. but now the situation has changed.
The CBI will be able to create stability in non-oil sector by adopting monetary and currency policies. the CBI governor added.
