Sunday, October 17, 2010

In Search of Country's Economic Growth Rate

The chairman of Iran’s semi-official Chamber of Commerce, Mohammad Nahavandian, today criticized the Central Bank of Iran (CBI) for refusing to release its figures on GDP rate of growth for the Iranian fiscal year of 1388 that ended on 20 March 2010. CBI has historically released the annual state of the economy reports, which had included the official growth rate. CBI has offered no explanations for the omission of the growth rate from this year’s report.

On another economic news, the CBI has put a stringent limit on the purchase of foreign currency, including US dollars. The Iranians who travel abroad can purchase up to $2,000 at the official rate after providing their airline tickets as proof of their needs for the currencies. The question now remains, what would other people who would need more than $2,000 do?

CBI’s silence on the availability of hard currency purchase beyond its new limit has renewed recent speculations that the CBI is contemplating the reintroduction of a two-tier currency exchange rate, an official rate and one based on the free market; and doing it at least in practice without a formal announcement. In the past, the Iranian economy has suffered enormously as the result of irregularities inherent in a two-tire foreign currency exchange system, and its reintroduction would cause same problems.

For a comprehensive report on Nahavandian’s remarks on CBI’s rate of growth, in Farsi, see today’s Donya-e Eqtrsad:


reader said...

A mere mortal of a reader, commenting on your blog of 5th October titled “Rush to Buy US Dollar” foresaw the upcoming of a two tier currency exchange system. I guess, soon people with a few dollars under the mattress will be heading towards Nasser Khorso Ave to get real market value for their dollars.
Amir+Nader 0 Humble readers 1

Amir Taheri said...

I still don't think we are going to come to a two tier system, prices have stabilized. Unless we see a shock in the economy like war starting.

reader said...

Perhaps I misunderstood the concept of a two-tier currency exchange system. If the limit is set to $2000 at the official rate on production of an airline ticket then surely the black market is the only alternative source for those needing more. The fundamental supply and demand situation will prevail and will eventually determine the real exchange rate.

Amir Taheri said...

In theory you are right if all avenues were like this meaning exchange houses and government banks. I am waiting on confirmation and clarification if this is indeed the new rule. If it proves true than i suspect it to be for direct bank exchanges and not exchange houses that will still be recieving as much as they want from the goverment to sell to the public. So in theory the price will stay stable. I suspect they might be trying to stop speculation if the story proves true. The government has seen the negative effects of a 2 tier system and I suspect unless a shock to the economy is done they will avoid a 2 tier system like the plauge.