How Iran’s Currency Reform Forced Small Grain Importers Out of the Market

Iran’s removal of preferential exchange rates was intended to reduce rent-seeking and improve transparency. Instead, the way the policy was implemented disrupted the supply chain for essential commodities and pushed many small grain importers out of the market.

Companies that had already sold imported goods through the government’s Bazargah platform at the official price of 113,000 rials subsequently lost access to foreign exchange allocations, making it difficult for many to remain in business while strengthening the market position of larger firms.

The country’s multiple exchange-rate system has also contributed to rising import costs and market distortions. Had Iran adopted a unified exchange-rate system in 2011, when the official exchange rate stood at 24,580 rials per U.S. dollar, many of the structural challenges now affecting the essential goods market could have been avoided.

The consequences have extended beyond importers. Prices of some essential goods have risen by more than 200% annually, while wage increases have generally remained between 16% and 20%, leading to a sharp decline in household purchasing power.

A unified exchange-rate system, direct consumer subsidies, and compensation for importers that complied with government regulations could help improve transparency, strengthen private-sector participation, and enhance the stability of Iran’s essential food supply chain.