Issuance of foreign exchange certificates creates a platform for stability in the foreign exchange market
During recent years, exchange rate developments are mainly affected by non-economic factors and exogenous which in practice has led to changes in the exchange rate in a way that is disproportionate to the economic foundations. However, in such a situation politician It has tried to minimize the effects and negative consequences of the above factors at the macro level by using the available tools and at the same time respecting the economic requirements of the country. Therefore, the political approach taken It has been decided by the central bank to pay attention to the necessity of protecting the foreign exchange reserves, to provide the basis for balancing supply and demand and, as a result, to stabilize the foreign exchange market.
Central bank currency bonds are an effective financial tool for market management
Currency bonds are a new investment option for the general public, which has been available since Saturday, November 28 It is a certificate Currency is actually a type of financial instrument for monetary policy by the central bank, which acts as an official and legal document such as stocks and bonds or other financial instruments, and is suitable for people who want to invest with their surplus capital in the currency market.
As a monetary policymaker, the central bank has felt the need to design and manage a new tool for managing the supply side of currency or the demand for currency, and for this reason, it has published currency certificates.
The policy of issuing these bonds has been adopted in a situation where the central bank is trying to control the inflationary expectations while managing the fluctuations of the currency market. Although some media with specific goals under question It is the decision of the policy makers to take this solution and not Performance and the impossibility of providing currency notes at the maturity of these bonds are emphasized. But this negative view with biased goals is completely superficial and without expert and technical examination.
With the increase in the exchange rate in informal transactions, we saw the creation of emotional and false shopping queues in front of the exchanges. A process that led to an increase in inflationary expectations in the society. The formation of these processions fueled excitement and created rial fluctuations in the field of currency, but currency bonds manage these emotions because it directs the false demand that is created for currency towards these bonds.
According to many experts, using this tool in the foreign exchange market is a good step forward, and the currency policy maker can attract capital demand and speculation by using it. As a result, the pressure will be removed from the banknote and balance will be created in the currency market.
By using this tool, the central bank can collect rials from the market and reduce the fluctuations of the currency market. If the attractiveness of these bonds is high, it can lead to the formation of a parallel market with the banknote market. In the world, there is also a market derivative There is a currency in which part of people’s property is invested.
Also, according to many experts, the current tool is structurally different from the previous product that was presented a few years ago. In the new tool, the basis of the market rate consists of a currency whose agreed rate is close to the market rates and follows the market fluctuations, but in the tool that was used in the past years, the basis of the rate was the bank rates, which did not follow the market rates and was not attractive to the applicants. .
Benefits of investing in foreign exchange certificates
Currency bonds are considered a type of investment, and those who think that investing in foreign exchange is profitable can use these bonds. These bonds give the opportunity to those who want to convert their property into currency and thus prevent its value from decreasing, to avoid going to the foreign exchange market and creating a false demand by buying it, and to buy the currency as legally and through official channels.
Central Bank currency certificates based on the dollar currency, as its title indicates, is a tool for diversifying Riyal investment opportunities, whose target audience is citizens who intend to invest in this area by considering the risk of exchange rate fluctuations and with personal analysis. Therefore, the compilation and publication of these bonds is to provide a mechanism to respond to the precautionary demand of citizens, taking into account the risk of profit or loss caused by periodic exchange rate fluctuations.
For that part of the investors who are still inclined to receive the banknote physically instead of rial settlement on the maturity date of the bonds, it is possible to physically deliver the banknote by paying the attorney’s fees related to the provision and transfer of the banknote.
Dollar-based Riyal bonds are a distinct investment tool with distinct features, the absence of the risk of theft of physical assets, the possibility of repurchasing bonds at the same sales rate without deducting the commission percentage, the higher ceiling of the investment amount, and the ease of buying bonds in selected branches of National Bank are among its advantages.
The profitability of investing in such instruments is due to the risk of fluctuating asset prices associated with these instruments, and therefore it is unreasonable to expect a specific or definite percentage of return for these instruments. Just as the yield of direct investment in those assets is also associated with the risk of profit and loss due to price fluctuations.
In addition, the currency bonds that are actually issued with the support of the central bank, assure the buyers that there is no possibility and risk of fraud and payment of counterfeit notes. Because in informal markets, fraud and sales of counterfeit currencies occur a lot. And since buying and selling in the informal currency market is illegal, victims of these scams face difficulties in pursuing legal action.
Another advantage of these bonds is the possibility of physical delivery at maturity. As mentioned earlier, the holder of foreign currency bonds can apply to receive the physical nature of the banknote at the time of maturity by paying a 7% attorney’s fee. Holders of foreign currency bonds can also choose Riyal cash settlement at maturity without paying attorney’s fees. In addition, with the possibility of repurchasing foreign currency bonds, the investors’ imagination is also relieved to sell these bonds during the maturity period, they can sell their bonds at the agreed daily dollar rate whenever they want. Of course, these bonds do not have the possibility of secondary transactions and transfer to others, therefore, to redeem these bonds, buyers must go to one of the foreign exchange branches of National Bank and redeem their bonds.
Tax exemption is another good benefit of foreign exchange certificates. According to the circular dated 27 August 1401 of the Tax Affairs Organization, all types of securities, including general and special term deposit certificates and types Sukuk Foreign currencies and Riyals that are issued within the framework of the regulations issued by the Central Bank of the Islamic Republic of Iran will be tax-free. Therefore, this tax exemption helps to increase the motivation of investors to buy Central Bank currency bonds.
Another important advantage of currency certificates is the non-stopping of subsidies. Because according to the spokesperson of Subsidy Targeting Organization, the information of currency buyers is registered as a household’s economic activity, and the family’s tithe may change and this will cause the subsidy of this family to be cut off. Because the purchase of these bonds is unhindered for all people and has nothing to do with the purchase of agreed currency by people in the past. Therefore, there will be no problem in classifying the tithes under the targeting system of subsidies and receiving cash subsidies.
People who want to convert their property into foreign currency in the foreign exchange market can, instead of going to informal and prohibited markets that have consequences such as tax, fraud, cut off subsidies and other things, they can receive currency certificate papers and keep themselves away from the possible damage of the informal market as well as paying taxes.
Details of distribution and sale of foreign exchange certificates
As stated in the announcement of the central bank, these bonds are published by the central bank and distributed under the agency of the National Bank of Iran, and selected foreign exchange branches of the National Bank of Iran throughout the country, whose names are in website National Bank and Central Bank have been published, they provide people with the possibility to buy these bonds.
in this loadBehzad Yamaili, the official of the Central Bank, stated that the said bonds have a maturity of three months, and said: during this three-month period, whenever people want to redeem their bonds, they can go to the branch where they bought the bonds. they did, issue the cancellation order and receive their rials.
The deputy of the central bank’s export department added: The customer’s payment basis when purchasing these bonds is determined by the average rate calculated in the Sima system (bond issuance system). The minimum purchase amount of bonds is $1,000 and the maximum is $4,000, and it is tax-free. It is also necessary to mention that real people must be 18 years old and above, and it is not possible to buy on behalf of an attorney.
According to Yameli, at the time of maturity and when the customer goes to the branch, the weighted average rate of the previous day is placed in the market consisting of foreign exchange transactions to settle the basis. In this case, the customer can submit two requests to the bank; First, he gives the request to the bank to receive the physics of the dollar bill, or second, you will be paid the equivalent of Riyal calculations. If the customer requests to receive dollar bills, he will be charged a 7% attorney’s fee.