Iran Central Bank; will the FX market
be in the right order?
– Iran Central Bank managed to control the forex market fluctuations through offering its rescue package over the past week. While some economists believe that such a package will act as a proper tool to relax the current fluctuations and enable the policy maker to implement its reform plans free from irrational behaviors, there are some disagreeing with high interest rates, even for a temporary and short period of time. In other words, the first group believe that lowering such a rate by decree will not yield the proper result the policy maker is looking for while the other group say that the current CBI supervisory structure and not-respecting health indices by banks will push them towards old days, paving the way for un-regulated financial institutions re-gaining power in the market. However, what is common between those for and against the CBI directive lies within the temporary nature of this solution, which will only act as a painkiller and the need to address the structural reforms in monetary and financial areas ASAP.