Monday, May 7, 2018

NEWS: International Monetary Fund supports Iran's move to unify the exchange rate of the riyal , 7 MAY

4th May, 2018

The Iranian government will need to speed up economic reforms, including plans to reform its entire banking system, if US President Donald Trump withdraws from the international nuclear deal Iran signed with international powers 2015

"The prospect of a US withdrawal from the nuclear deal will increase uncertainty, and uncertainty will require some measures to ensure market stability," said Jihad Azour, director of the Middle East and Central Asia Department at the International Monetary Fund in an interview with Bloomberg. More recently, speculation about the US withdrawal from the nuclear deal has added mounting pressure on Iran's economy, which has pushed the price of the Iranian riyal to record lows

According to Azour, policy makers in Iran need to solve the problems of the banking system in the country, which imposes difficulties on loans to small and medium enterprises. The fund consistently urges the Iranian authorities to recapitalize and structure Iranian banks

Azour said earlier that Iran's decision last month to unify the currency exchange rate in both the official and free markets to support the riyal was "a step in the right direction." 

The riyal has lost almost half of its value since September, partly because of fears that the United States will emerge from the nuclear deal

Iranian authorities said last month they were consolidating the official exchange rate of the riyal and its price in the free market for a flat rate of 42 thousand riyals against the US dollar. 

Azour believes that this unification "helps to eliminate distortion and improve the competitiveness of the economy


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