Iran’s Central Bank, which had fixed the national currency at 12,260 to the dollar in a bid to stabilize it, said traders are once again allowed to buy and sell at market rates.

“Licensed exchange houses are given permission to buy and sell foreign currencies and answer customers’ needs based on the mechanism of the market’s supply and demand,” the central bank said in a statement posted on its website.

The announcement follows a meeting between central bank officials and representatives of the Association for Exchanges of Iran, according to the statement. The bank’s deputy governor for foreign-currency affairs, Minou Kianirad, wasn’t available to comment after a phone call to her office.

The move marks an easing of the institution’s stance after it fixed in January the rate of the rial to the dollar, a devaluation of about 8.5 percent, and barred transactions in unofficial currency markets where the rate had soared to almost twice that level. The drop had been a result of Iranians’ rush to buy dollars on concern the government may be unable to maintain economic stability amid international pressure and tighter financial sanctions on Iran.

Under the Jan. 26 decision, Iranians’ demand for foreign currencies had to be met through banks or licensed exchange houses selling dollar at the official rate. The restrictions didn’t succeed in recent weeks in halting transactions on the black market at rates close to 20,000 rials to the dollar.

Central Bank Governor Mahmoud Bahmani said in a meeting last week with the Association for Exchanges that the bank backed exchange houses’ ability to use market rates and that it was necessary for currencies’ rates to be “real,” the Donya-e- Eqtesad newspaper reported March 15.

The Association for Exchanges listed the market rate at about 19,050 rials at 11:45 local time today. The rate indicated is for information and transactions are carried out based on agreement, it said on its website.

By Ladane Nasseri

Source : Bloomberg