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Iran’s new chief banker pledges tight monetary policy

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)
Central Bank of Iran Governor Ali Salehabadi

Iran’s newly appointed chief banker Ali Salehabadi has vowed he would introduce a tight monetary policy to control inflation in the country.

Hours after he was named Central Bank of Iran (CBI) governor on Wednesday, Salehabadi said he would prevent any further expansion of money supply in Iran while trying to stop excessive borrowing of the banks from the CBI.

“We will try to control the monetary base and prevent extra borrowing of the banks from the CBI resources in order to control the market,” said the new CBI governor.

Salehabadi, 44, will be the youngest ever banker in charge of the CBI. He is a financial management PhD from the University of Tehran and has served as head of the Securities and Exchange Organization (SEO) of Iran between 2005 and 2014 before becoming the CEO and chairman of the board at Export Development Bank of Iran.

A key legacy of his time as SEO head was to set up various bodies and departments in the organization, including a religious committee to check if trading complies with Islamic principles.   

He told the Iranian state TV after his appointments was announced on Wednesday that the CBI and the Iranian finance ministry would cooperate to prevent any further attempt by the government to finance its budget deficits through expanding the money supply.

Salehabadi said that controlling rising foreign currency prices would also be one of his top priorities.

“We have thought about required mechanisms to restore calm to the exchange market in the upcoming days and weeks,” said Salehabadi.

Iran’s rial has continued to drop against major international currencies since new President Ebrahim Raeisi came into office in August.

The rial rebounded slightly on Wednesday to sell for 279,300 against the US dollar.

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