The Bank-e Merkazi-ye Jomhuri-ye Eslami-ye Iran, or Central Bank of the Islamic Republic of Iran, is the highest monetary authority in the country. Each year after the approval of the government's annual budget, the Central Bank presents a detailed monetary and credit policy. Short-term credit policies need to be approved by the
|Exchange rates: Iran|
|Iranian rials (IR) per US$1|
|Note: Iran has three officially recognized exchange rates; the averages for 1999 are as follows: the official floating rate of 1,750 rials per US dollar, the "export" rate of 3,000 rials per US dollar, and the variable Tehran Stock Exchange rate, which averages 7,863 rials per US dollar; the market rate averages 8,615 rials per US dollar.|
|SOURCE: CIA World Factbook 2001 [ONLINE].|
government and long-term credit policies have to be incorporated into the 5 Year Development Plan with Parliament's consent.
After the introduction of the Tehran Stock Exchange (TSE) rate in July 1997 and until March 2000, 2 officially recognized exchange rates coexisted in Iran. The official rate of the Iranian rial—1,750 per U.S. dollar—applies to oil and gas export receipts, imports of essential goods and services, and repayment of external debt. The "export" rate, fixed at 3,000 rials per dollar since May 1995, applied to all other trade transactions, but mainly to capital goods imports of public enterprises. In order to ease pressure on exporters, the bank introduced a currency certificate system allowing exporters to trade certificates for hard currency on the Tehran Stock Exchange (TSE). This method finally replaced the fixed export rate in March 2000, and has since held steady at some IR8,500:US$1. There is an active black market in foreign exchange, but the development of the TSE rate and the ready availability of foreign exchange over 2000 narrowed the differential to as little as IR100 in mid-2000. The reunification of Iran's multi-tiered exchange-rate system, which has plagued Iran's non-oil exports and frustrated potential investors since the revolution, had been under discussion since a failed attempt in 1993 to operate a single, floating exchange rate . At the same time, as a step toward further liberalization and integration of foreign exchange markets, banks were allowed to deal relatively freely with foreign exchange. Despite this, foreign currency is still hard to get and even harder to keep for ordinary Iranians.
Given recent government decisions to allow banks to sell currency at free-market rates, together with the positive outlook for oil earnings, and the apparent willingness of new lenders, particularly European banks, to extend new credit lines to Iran, an attempt at reunification is likely to be made in 2001-02, at a rate of around IR9,000=US$1.