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Untitled Document
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Iran |
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The currency of the Islamic Republic of Iran is the Iranian Rial, which is divided into 100 Dinars.
Exchange system and exchange rate arrangements in the Islamic Republic of Iran have been characterized since the 1970s by a system of multiple exchange rates, and the associated foreign exchange controls. The complexity and the extent of restrictiveness of the regime have varied considerably in response to major external and domestic shocks, and foreign exchange availability. (Sundararajan, etc., 1999)
The trends of liberalizing the Iranian exchange rate system began s0howing up in the early 1990s, when the number of exchange rates in the official market was reduced from seven to three: the official rate for oil export, essential import, and official debt; the competitive rate for intermediate and capital goods import; and the floating rate for other transactions.
In 1993, in an attempt to further liberalize the exchange rate system, the three official rates were unified. The new rate was determined on a daily basis by the Bank Markus under a managed floating system. However, the unified rate was not applied comprehensively, with foreign exchanges still being provided for essential imports at the former basic rate, which in turn resulted in a quasi-fiscal losses and expansionary financial policies. As a consequence, the exchange rate unification could not be sustained.
Since 1994, with the introduction of an export rate, Iran adopted multiple exchange rate system again, with the included kinds of exchange rates varying according to the needs of maintaining its export competitiveness and domestic price levels. The nowaday Iranian exchange rate system consists of two exchange rates: (1) the official "floating" rate of Rls1, 750 per $1 applied mainly to the imports of essential goods and services of public and publicly guaranteed debt; (2) the TSE (Tehran Stock Exchange) rate applied to all other transactions. The Bank Markus (BM) sets these exchange rates. Foreign exchange operations are centralized at the BM. The exchange regime is classified by the IMF as conventional pegged arrangement.
Resources of reference include:
1. World Currency Yearbook. (WCY)
2. IMF Annual Report on Exchange Arrangement and Exchange Restriction. (IMF)
3. Sundararajan, V., Lazare, M., and Williams, S. (1999): "Exchange Rate Unification, the Equilibrium Real Exchange Rate, and Choice of Exchange Rate Regime: The Case of the Islamic Republic of Iran," IMF Working Paper, WP/99/15, pages 41
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Date
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Changes
to the exchange rate regime
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Iranian Rial per U.S. Dollar
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| 22 May 1957 | The average "trade rate" of Rls75.75 per U.S. Dollar became the Official Rate, putting an end to the old Rls32.50 per U.S. Dollar parity. (WCY 1984, p.365) | 75.750 | | 22 May 1957 | The average "trade rate" of Rls75.75 per U.S. Dollar became the Official Rate, putting an end to the old Rls32.50 per U.S. Dollar parity. (WCY 1984, p.365) | 75.750 | | 4 October 1969 | The buying and selling rates for the unit were set at Rls76.25/76.50 per U.S. Dollar. (WCY 1984, p.365) | | | 15 August 1971 | Following the devaluation of the U.S. Dollar, the Rial did not alter its exchange value against the U.S. Dollar, thus effecting a de facto devaluation. (WCY 1984, p.365) | | | 21 December 1971 | The gold content of the Rial was de jure reduced 7.89%, paralleling the U.S. Dollar devaluation and thereby retaining the Official Rate of Rls75.75 per Greenback. (WCY 1984, p.365) | 75.750 | | 15 February 1973 | Following the devaluation of the U.S. Dollar, the gold content of the Rial remained unchanged, thus realigning the Official Rate to Rls68.1747 per Greenback. The unit's buying and selling rates were adjusted to Rls68.60/68.85 per American unit. (WCY 1984, p.365) | 68.175 | | 9 June 1973 | These rates were revised to Rls67.50/67.75 per U.S. Dollar. (WCY 1984, p.365) | | | 14 January 1974 | A two-tier market was established with an Official Commercial Rate fixed at Rls67.50/67.75 per Greenback applicable to import payments, travel allocations, export proceeds and current receipts by public sector agencies, and an Official Noncommercial Rate for all other transactions. Proceeds from most exports other than oil and natural gas can be negotiated at either exchange rates. (WCY 1984, p.365) | | | 31 December 1974 | Noncommercial Rate: 67.85 | 67.750 | | 12 February 1975 | An Effective Rate was established, as the Rial's ties to the U.S. Dollar were severed, and the unit linked to the SDR at an exchange value of Rls82.2425 per SDR, thereby placing the unit on a controlled, floating basis with buying and selling rates adjusted whenever the SDR/U.S. Dollar rate changed by more than 2.5% and was maintained for more than five consecutive days. (WCY 1984, p.365) | | | 31 December 1975 | Commercial and Noncommercial Rates: 69.28 | 69.280 | | 31 December 1976 | Commercial and Noncommercial Rates: 70.63 | 70.630 | | 14 December 1977 | The previous procedure of adjusting exchange rates was abolished. (WCY 1984, p.365) | | | 31 December 1977 | Commercial and Noncommercial Rates: 70.48 | 70.480 | | 1 April 1978 | The fluctuation range for the Rial was widened to 7.25% above and below the fixed rate. (WCY 1984, p.365) | | | 22 July 1978 | The fluctuation range was abandoned in favor of a "target zone" above and below the fixed rate. (WCY 1984, p.365) | | | 14 November 1978 | The Official Free Noncommercial Rate was placed on a fluctuating basis. (WCY 1984, p.365) | | | 31 December 1978 | Commercial Rate: 70.48; Noncommercial Rate: 84.00 | 70.480 | | 10 January 1979 | The Effective Rate became theoretically inoperative, and the exchange rate system was revamped. An Official Rate of Rls70.35/70.60 per U.S. Dollar buying and selling was made applicable to payments for imports and proceeds of exports by the public sector. (WCY 1984, p.365) | | | 8 May 1979 | A Preferential Rate of Rls 78.00 per U.S. Dollar was applied to proceeds from exports of the private sector. An Unofficial Rate of Rls105.00 per U.S. Dolllar governed all other transactions. (WCY 1984, p.365) | | | 8 July 1979 | A Resident Travel Rate was created for conversion of travel allowances, half at the Official Rate and half at the Unofficial Rate. (WCY 1984, p.365) | | | 31 December 1979 | Preferential Rate: 78.00; Unoffiical Rate: 105.00; Resident Travel Rate: 87.74. | 70.480 | | 22 May 1980 | The Rial's official link to the SDR was reinstated at Rls92.30 per SDR, a devaluatin of 11%, thus reestablishing the controlled, floating Effective Rate for practically all transactions. A Preferential Rate is granted proceeds from non-oil exports, while other Posted Rates apply to certain invisibles transactions. (WCY 1984, p.365) | | | 31 December 1980 | Preferential Rate: 82.00; Unoffiical Rate: 115.00 | 72.320 | | 31 December 1981 | Preferential Rate: 89.00; Unoffiical Rate: 119.00 | 79.450 | | 31 December 1982 | Preferential Rate: 91.50; Unoffiical Rate: 122.00 | 83.430 | | 1983 | The Unofficial Rate was abolished. (WCY 1985, p.415) | | | 31 December 1983 | Preferential Rate: 96.60. | 88.160 | | 19 December 1984 | The Preferential Rate was abolished. (WCY 1986-1987, p.734) | | | 31 December 1984 | | 93.990 | | 31 December 1985 | | 84.230 | | 31 December 1986 | | 75.640 | | 31 December 1987 | | 65.620 | | 31 December 1988 | | 68.590 | | 8 October 1989 | A so-called Competitive Rate was established at Rls1,000.00 per U.S. Dollar and made applicable to public sector and State agency import payments. (WCY 1988-1989, p.725) | | | 25 October 1989 | The rate was revalued to Rls975.00 per Greenback and expanded to include some private sector payments. (WCY 1988-1989, p.725) | | | 7 December 1989 | The Competitive Rate was realigned to Rls800.00 per U.S. Dollar. Also, a Preferential Rate was established at Rls420.00 per Greenback for private sector imports of certain items and a Service Rate was created at Rls845.00 per U.S. Dollar for the sale of foreign exchange to qualified individuals for certain service transactions. (WCY 1988-1989, p.725)
In addition, two Export Incentive Rates were created, based on the surrender of proceeds from non-oil products calculated on the basis of "reference prices" at the Effective Rate plus Rls350.00 per U.S. Dollar when received in convertible currency and Rls270.00 when within framework of a barter or clearing arrangement. The proportion that must be surrendered varies according to the type of export. The remainder can be sold at the new Official Free Market Rate through licensed foreign exchange dealers. (WCY 1990-1993, p.795) | | | 31 December 1989 | Export Rates: 270.00 and 350.00; Preferential Rate: 420.00; Competitive Rate: 800.00; Service Rate: 845.00; Free Market Rate: 1,140.00. | 70.240 | | 31 December 1990 | Export Rates: 270.00 and 350.00; Preferential Rate: 420.00; Competitive Rate: 800.00; Service Rate: 845.00; Free Market Rate: 1,458.00. | 65.310 | | 21 January 1991 | The exchange rate system was simplified and reduced to three tiers.
The Effective (Official) Rate was made applicable to receipts from oil exports and to payments for essential imports, military items, material used in important government projects and to certain invisibles and public sector transaction. It was determined daily by Bank Markazi (the central bank) on the basis of the SDR-rial rate. (IMF 1992, p.240)
The Competitive Rate applied to other imports.
The Floating Rate, announced daily by the Central Bank on the basis of free market rtes, governed all other transactions.
An Official Free Market Rate also exists. (WCY 1990-1993, p.796) | | | February 1991 | Iranians traveling abroad, foreigners and local exporters were allowed to use the Floating Exchange Rate. (WCY 1990-1993, p.796) | | | 31 December 1991 | Competitive Rate: 600.00; Free Market Rate: 1,425.00; Floating Exchange Rate: 1,422.00. | 64.590 | | 21 March 1993 | The Competitive and Floating Exchange Rates were abolished and the Effective Rate, set daily by the Central Bank based on supply and demand in the exchange markets, governed all transaction. (WCY 1990-1993, p.796) | | | 31 March 1993 | | 1,649.000 | | 31 December 1993 | | 1,749.000 | | 1994 | The exchange rate system consisted of the following rates:
(1) the official rate, which is fixed at Rls1,750 per US$, applies mainly to the imports of essential goods;
(2) the official export rate, which is fixed at Rls2,345 per US$1, is applied mainly to imports of raw materials and spare parts
(the supply of foreign exchange at the first two rates comes from the Government's oil export proceeds);
(3) the authorized dealers' market rate, which is determined by supply (mainly tourist receipts) and demand (mainly for nonessential services and transfers, such as the travel allowance);
(4) the free market exchange rate, which results largely from direct transactions between importers and exporters, with little intermediation from the banks and no intervention from Bank Markazi. | | | 4 May 1994 | An "Export Rate" was introduced. (IMF 1995, p.241) | | | 31 December 1994 | | 1,750.000 | | 1995 | The exchange rate system consisted of two rates for the U.S. Dollar:
(1) The official rate, which is fixed at Rls1,750 per $1, applied mainly to the imports of essential goods;
(2) The export rate, which is fixed at Rls3,000 per $1, applied to all other transactions. | | | 20 May 1995 | The export exchange rate was depreciated to Rls3,000 from Rls2,354 per $1. (IMF 1996, p.240) | | | 31 December 1995 | | 1,750.000 | | 1998 | The exchange rate system consisted of three rates:
(1) the official "floating" rate of Rls1,750 per $1 applied mainly to the imports of essential goods and services of public and publicly guaranteed debt; (2) the official "export" rate of Rls3,000 per $1 applied to all other transactions; (3) and an effective Tehran Stock Exchange (TSE) rate applied to imports from a positive list of 30 categories of goods (mostly essential industrial raw materials). | | | 20 March 2000 | The official "export" exchange rate was abolished, reducing the number of exchange rates to two from three. (WCY 2000, p.440) | |
Notes: Annotation of the exchange rates listed in the right column of the table.
1.1957-05-22---1974-01-14: Official Rate (fixed to U.S. Dollar);
2.1974-01-14--1975-02-12: Official Commercial Rate;
3.1975-02-12--1979-01-10: Effective Rate;
4.1979-01-10--1980-05-22: Official Rate;
5: 1980-05-22--1991-01-21:Effective Rate;
6: 1991-01-21--: Official Rate.
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