Iran’s central bank raises deposit rate to ease pressure on rial
The Central Bank of Iran (CBI) has raised its key interest rate by a fifth amid efforts to ease pressure on national currency rial.
The CBI said in a Wednesday statement that fixed returns on deposits in the central bank belonging to private and government banks and credit institutions would increase by 2 percentage points to 12 percent as of June 27.
The statement said the decision, adopted during a CBI board meeting earlier on Wednesday, was meant “to preserve the value of national currency and to help economic growth”.
It said the move was a justified one given recent figures showing that the Iranian economy had grown 1.1 percent year on year in March without considering the share of oil sales in government revenues.
The rate of borrowing from the CBI for banks and credit institutions would remain 22 percent as set in a previous meeting of the bank’s board of directors last month.
The rate hike comes a day after reports said the CBI had injected around $55 million into the country’s currency market to ease pressure on the Iranian rial.
The move caused the rial to recover from record lows reported early on Tuesday when the currency was trading at 205,000 against the American dollar.
Experts said the rial would further recoup losses in the coming days with continued government intervention in the market.
The semi-official Tasnim news agency said that only $3 million of the first tranche of government injection into the currency market had been sold, suggesting that exchange dealers were struggling to maintain a bubble for the price of dollar.
The report said that some 76 million euros worth of various foreign currencies had also also been auctioned in a secondary exchange market of which only 18 million euros had been sold.
It said prices of foreign currencies would start a freefall in the coming days once the unofficial dealers stop resisting government moves to calm the market.
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