Limitation in the allocation of currency resources

Due to the fact that Iran is located in a hot and dry geographical position with low rainfall, it is required to supply some agricultural products such as livestock inputs through imports. However, non-allocation and provision of currency, mandated pricing and disconnection of Iran’s banking system to SWIFT are the most important challenges in the way of providing and distributing inputs.

Where does the limitation in the allocation of currency resources to traders come from?

The challenges of exchange and financial transactions can be examined in both Rial and foreign exchange sectors. Currently, according to the conditions of the country and the contractionary policies considered in the field of monetary policies, the provision of Rial resources has faced limitations and challenges.When the contractionary policy is applied, the price of resources naturally starts to increase and this causes banks to provide the working capital of companies active in this field at higher prices. As a result, they should provide importers with higher prices. Of course, according to the pricing law, the importer must supply the goods based on the determined prices and does not have the power to determine the price.

Therefore, if the price of money has an upward trend, banks cannot easily transfer this money to importers, and naturally, the importer also offers the goods at a higher price, which is a challenge and a problem in itself.

If we say that we do not have any restrictions in the issue of currency supply, this is a false statement. He added: Most of the current problems and challenges in the field of financial transactions with foreign sellers originate from the limitations of currency supply.When restrictions are created, naturally, law after law is put in order to be able to use these limited resources in the most optimal way possible. Hence, if there were no restrictions on foreign exchange resources, the market could work in a completely competitive manner. Accordingly, these restrictions lead to new rules, which result in the market being out of competition.

Now, it remains to be seen how much these rules can efficiently distribute the limited currency resources among the importers. From the last two years, a business that registers a new order and is in the turn of currency allocation, must provide 5% of it in cash while no currency has been allocated yet. The reason is that, in order to be able to manage this limitation of currency resources and receive the currency allocation code, traders periodically register their orders and put them in the queue for currency allocation. In this situation, the central bank must place its limited resources among a number of people waiting in the queue for currency allocation, who may either not need currency at that moment or may not have the Rial resources to provide currency.