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Iran to maintain controversially low forex price for next fiscal year

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Iranian government would be able to import basic goods at a low US dollar price of 42,000 rials.

The Iranian government has been allowed to maintain a controversially low price for the US dollar in the next fiscal year’s budget.

The official IRNA news agency said a parliamentary committee discussing articles of a draft budget law for the next calendar year starting March 20 had agreed in a Thursday meeting that government would be able to import basic goods at a US dollar price of 42,000 rials.

The decision comes days after the Iranian parliament approved the outlines of the budget bill presented for a second time to the chamber by the government.

A majority of lawmakers in the parliament had been opposed to the price on the grounds that it would trigger rent-seeking activities in the economy.

The government, however, argued that the price, which is much lower than a current market price of 260,000 rials for the US dollar, should be maintained to prevent a sudden hike in the prices of basic goods.

The IRNA report said that only five items of basic goods, including medicines, would continue to be imported using the low-price exchange rate, down from 25 items on a list approved for the purpose in 2018.

However, the budget bill presented to the parliament for a second reading last week insists that the official exchange rate for the rial against the US dollar should be raised to 115,000 in the next calendar year.

Members of the parliament’s appropriations committee have been pushing for an official exchange rate of 175,000 for the US dollar, saying the price would be more consistent with the current economic realities in Iran.

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