Just before the end of this Persian year, the government and the Majlis are trying to work together to lower foreign currency and gold prices. In addition to the security arrangements adopted by the Central Bank and the Majlis, the Central Bank Governor announced that to help the public ahead of the new year, there is a plan to channel foreign currency into the market by withdrawing funds from the National Development Fund. This move may prove helpful to some degree in lowering prices, but experts are expressing doubt regarding its long-term efficacy. According to the experts, an extremely large amount of cash alone can maintain a very hot gold market despite decisions on early sale of gold coins. The lack of public trust in politicians’ promises regarding the lowering of the dollar exchange rate is what is causing experts to express pessimism. In an interview with Fararu, an economic affairs analyst said that what is most surprising is that the highest ranking economic official, i.e. the Central Bank Governor, is constantly conducting interviews. The underlying policy behind these interviews is to generate a change in public behavior through information, but since the foreign currency promises have not been fulfilled during this period and public distrust is high, these updates are producing the opposite result. Additionally, current economic conditions make it impossible to fund the flow of foreign currency as promised by the Central Bank, and the only way this can occur is if the government takes a loan from the Bank, which would increase the amount of cash and increase inflation. According to the expert, government efforts are a form of brokerage in the economy, and are not resulting in the creation of funding. Furthermore, their long-term negative impact far outweighs any short-term positive effects. By lowering the price of the dollar before the elections, the government is trying to lower prices to some extent, but it will not succeed due to the lack of public trust in foreign currency policies.
Public distrust of government policies in the foreign currency market grows
- Published: 5 days ago on Wednesday, 13 February 2013
- By: Iran Daily Brief
- Last Modified: February 13, 2013 @ 2:44 pm
- Filed Under: Economy
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