Hidden rent | Preferential currency reform is in the interest of the capital market / rent of certain preferred currencies

In an interview with Fars News Agency’s economic correspondent, Seyed Farhang Hosseini said about the need to reform the process of allocating preferential currency to some goods: It has the necessary necessities at the price of 4200 currency on the table of the people, but it has caused a significant amount of rent to reach certain people and has a negative effect on the economy.

He also said: “At the same time, due to the sharp difference between the price of the preferred currency and the semi-currencies over the market price, the volume of demand for this currency has increased sharply and the volume of corruption and violations in this area.” It has been very high.

The economist stressed: “Due to the inefficiency of the policy of allocating foreign currency to goods and its lack of access to the people, the method of payment and allocation of subsidies should be changed and by removing the currency, direct subsidies should be paid from the removed part of the currency.” The elimination of this currency, considering that the price that is available to the people is basically equal to the dollar price of the years before the two exchange rates and the currency jump, so it did not have a definite effect and as a result the elimination of 40 will not have a significant effect on consumer prices. . On the other hand, in terms of policy, direct allocation to the people is a more appropriate solution and contributes to social justice and, while eliminating rents, leads to optimal allocation in the economy.

At the same time, the distribution and redistribution of subsidies resulting from the reform of the preferential exchange rate at the community level through the allocation of direct subsidies can contribute to a fairer and more equitable access to income deciles, the economist noted. It seems that the consumption of many of these goods is much lower in the lower deciles of society and is between one third and one eighth of the upper deciles of society. As a result, cash allocation can help reduce class gaps while improving people’s livelihoods.

Hosseini said: “The negative effects of the preferential currency reform in the current situation, given the issues mentioned and the effect of currency 40 on the final consumer price is not very high and in practice the approved method of allocating 4200 currency is in favor of intermediaries, brokers and rent-seekers. The direction can also be useful and fruitful for the economy.

The CEO of a mining company in the OTC market also said: “In the field of capital markets, the elimination of currency 40 can have a significant effect on some groups.” In the groups of food, edible oil, medicine, as well as in the group of agriculture and animal husbandry, we see receiving 4200 currency. Given that these businesses are mainly based on the profit margin approved by the Protection Organization in pricing and sales, the removal of this currency will increase the selling price of the products of these companies.

According to Hosseini, increasing product sales, in turn, while maintaining profit margins, will increase the rial value of the profits of this group of companies. At the same time, the major companies that are active in the field of capital markets in areas such as agriculture and animal husbandry, as well as in the field of oil and medicine, are companies with a strong history in this field and their focus is production and sales and focus on use. They do not have foreign exchange rents.

According to the capital market expert, as a result of the liberalization that takes place and the departure of brokers and people who were and are looking for rent, the business environment for these companies can be improved and their access to foreign exchange resources to import raw materials can be better. And witness production growth in these companies. It seems that in recent months some of the shortcomings have been due to restrictions on the allocation of foreign exchange, but if this issue and liberalization occurs, this problem can also be solved. At the same time, due to relative cheapness as well as hoarded demand as well as rent-seeking, the demand for goods priced on the basis of currency has been much more intense, and price correction causes the relative price of these goods to be adjusted in the markets. Be corrected and the pressure and demand due to the presence of rents can be removed from the market.

Hosseini pointed out: In total, the 4200 Toman exchange rate correction in the capital market can have a positive effect on the stocks of groups such as pharmaceuticals, edible oils and foodstuffs, as well as agriculture and animal husbandry..

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