The target inflation rate in 1402 is 25%

According to Iran EconomistIn a special news interview on Monday night, Mohammad Reza Farzin added: In the 80s, inflation grew more from the liquidity side, but in the 90s, mainly cost pressure led to inflation, which was mainly caused by the increase in the exchange rate, and the exchange rate was mainly affected by Uncertainty has increased.

Stating that the predictability and relative stability of the exchange rate is more important than the rate itself, he continued: We must use global experiences and tools to manage the exchange rate.

Farzin also stated that we have implemented several policies in the Central Bank and we are deepening them, adding: One of them is the establishment of the Iranian currency and gold exchange center.

He continued: “Telegram channels affect the foreign exchange market by setting rates and increasing negative inflationary expectations.”

Farzin added: Rates and markets that have no rules, and to deal with that, we set up the exchange center.

Establishing a currency stabilization fund to manage the currency market
The head of the central bank also said: We will create a currency stabilization fund to intervene in the market when necessary to stabilize the currency. We have also designed the currency advance with a longer period to create predictability and confidence. Currency swap is also very necessary in our country because we have to have currency balance with other countries in commodity trade.

Farzin added: Another issue is regulation, which forms the basis of the market, and monitoring and stability of regulations is its complementary action. For example, in Nima system, behind the line transactions take place, which is a violation, and if the supervision is strengthened, they can be stopped and introduced to the judiciary. The gold market is also important because it is a substitute for it and we have a plan for it in the exchange center.

Providing 65 billion dollars of currency in 1401
The head of the central bank continued: In the new year, we included a new policy in the field of banknotes, which calmed down the queues. Therefore, all applicants must have a foreign currency account and make transfers in the banking system

He added: With this method, we can easily provide all the real needs of the people for currency notes.

Farzin said: “Last year, we allocated 65 billion dollars of foreign currency in Samame Nima and the exchange center, which was 10 billion dollars more than the previous year and 21 billion dollars more than in 2019, and this practice will be strengthened this year.”

The target inflation rate for 1402 is 25%
The Governor of the Central Bank continued: The role of liquidity on inflation is undeniable. Currently, the liquidity of the country is 6400 hemats. Until March 11, the liquidity growth rate was 27.8%, while the inflation rate was 46%. In the last year, the methods of controlling the growth rate of liquidity have been effective.

Stating that our real growth rate has been negative for four years, so the main source of inflation is the exchange rate, he added: Our target for 1402 is an inflation rate of 25 percent.

Increasing the growth of the monetary base due to the disharmony of the government and the indiscipline of the banks
The head of the central bank stated: The growth rate of the monetary base was 33.9 last year, the main reason for which was the increase in the demands of the central bank from the banks. One of the main factors was the government’s debt to the banks, as well as the dissatisfaction of some banks due to indiscipline.

Farzin said: We have planned a plan to resolve the dissatisfaction of the banks.

He added: In order to prevent banks from overdrafting, the government should increase capital in state-owned banks and reduce a part of its debt of 117 hemats to banks. All institutions have a role in controlling inflation, and we have written the role of all of them, and a specific program has been developed in the government to control inflation.

Monetary and financial and commercial indisciplines can lead to inflation
The head of the central bank said: In the 80s, inflation grew more than liquidity. But in the 1990s, cost pressure mainly led to inflation, most of which was caused by the increase in the exchange rate, and the exchange rate increased mainly due to uncertainty.

He continued: Predictability and relative stability in the exchange rate is more important than the rate itself. We must use global experiences and tools to manage the exchange rate. At the central bank, we have implemented some policies and we are deepening them. One of them is the establishment of the Iranian currency and gold exchange center.

Farzin said: “Telegram channels affect the foreign exchange market by setting rates and increasing negative inflationary expectations.”

He clarified: rates and markets that do not have rules, and to deal with that, we set up the exchange center.

The Governor of the Central Bank added: We will create a currency stabilization fund to intervene in the market when necessary to stabilize the currency. We have also designed the currency advance with a longer period to create predictability and confidence. Currency swap is also very necessary in our country because we have to have currency balance with other countries in commodity trade. Another issue is regulation, which forms the basis of the market, and the monitoring and stability of regulations is its complementary action. For example, in Nima system, behind the line transactions take place, which is a violation, and if the supervision is strengthened, they can be stopped and introduced to the judiciary.

Farzin said: “The gold market is also important because it is a substitute for it and we have a plan for it in the exchange center.”

The government has no problem to meet its expenses
The head of the Central Bank said: “Most of the government’s resources (372 Hamats) are in banks, but according to the law, the government and state-owned companies are not allowed to make deposits in commercial banks.”

He added: This amount was transferred from the banking system to the central bank, which itself fueled the disharmony of the banking system, and we are looking for an appeal.

Farzin continued: “The government sells currency to us at the rate of 28,500 tomans and we give it to the merchants at the same rate, at the same time, the government budget is closed at the rate of 23,000 tomans, so it will not cause any problems for the government’s expenses.”

About 16 billion dollars of currency are in the hands of the people
The head of the central bank added: capital flight means handing over rials and buying foreign currency, and it does not matter if the currency leaves the country or not.

Stating that actions are being taken all over the world to prevent capital flight, he said: We have also created currency accounts so that currency can be used in the country’s economy and transferred in a transparent environment.

Farzin added: In my opinion, based on the estimate that was made according to the theft from the National Bank fund, about 16 billion dollars of foreign currency is in the hands of the people.

He said: The central bank sells coins for two reasons, which is either to collect liquidity from the society as a monetary policy or to reduce the coin bubble.