A new currency crisis is on the way

A new currency crisis is on the way.

The government gave a free hand to the central bank.

According to the information obtained by Iran Gate, a new currency crisis is underway. In the past week to 10 days, petrochemical companies, which had a significant share in the country’s foreign currency resources, have almost not supplied any currency in the Nima market. Experts believe that this reaction from Iranian petrochemical companies is a result of the central bank’s policy of deepening the price gap between the free market and the Nima market.

If this reaction continues from petrochemical companies and spreads to other industries, the government of Ebrahim Raisi will undoubtedly face a severe currency shortage crisis.

The evidence obtained by Iran Gate indicates a halt in currency supply by petrochemical companies in the Nima market. Apparently, this action is a result of the announcement of the 28,500-toman exchange rate by Mohammad Reza Farzin, the new head of the central bank. This action initially led to protests and backlash from export-oriented industries, but gradually we are witnessing tangible consequences and operational reactions from major exporters in the Nima market.

Farzin’s major blunder has trapped the government.

Mohammad Reza Farzin, who was known as a relatively successful economist and banking manager in the structure of Iran’s economy, was appointed as the Governor of the Central Bank of Iran about a month ago. In the initial hours of his appointment, he appeared in front of the cameras of the Islamic Republic of Iran Broadcasting and announced the stabilization of the exchange rate at 28,500 tomans.

Economic activists did not wait and immediately tried to inform the government about the destructive and widespread consequences of this policy, which was definitely influenced by Farzin, through social networks. However, as expected, none of the government’s economic policymakers paid attention to these words. The Nima market immediately went under the influence of the new Central Bank, and the deep gap between the free market rate and the exchange rate of 28,500 tomans suddenly intensified.

From the very beginning, economists believed that Farzin had fallen into the trap of the government, and such a statement, especially in the initial hours of his appointment as the head of the country’s largest economic policymaking institution, was a strategic mistake.

Farewell to the petrochemicals with Nima

According to informed sources, many other petrochemical companies do not intend to sell the dollars earned from their exports in the market known as NIMA. The reason for this decision is the price gap that was previously mentioned, and recent decisions by the government and the central bank have deepened this gap. If this news is true, it can be said that a new currency crisis is on the way for importing essential goods.

It should not be forgotten that the petrochemical industry has played a significant role in providing foreign currency resources for the Islamic Republic and has had a very influential role in supplying the government’s foreign currency needs during the sanctions period. Some estimate that more than half of the currency supplied in the NIMA market is mainly from profitable petrochemical companies and their subsidiaries for the Islamic Republic.

Therefore, if the petrochemical giants refrain from supplying the market in NIMA, this market, which is the source of supplying essential goods imports, will undoubtedly face a serious crisis, the consequences of which will affect the people in the streets and markets.

Whisper of a strike in the petrochemical industry

As mentioned, evidence suggests that the halt in currency supply in the NIMA market is caused by petrochemical companies. Additionally, some petrochemical companies like Pardis Petrochemical have reported that the production line of certain phases of this massive complex has been stopped. However, this company has stated that the reason for the production halt is due to cold weather and limited access to the required fuel. This is despite the fact that this complex did not halt its production during the cold peak period in Iran, when industries faced widespread gas cuts.

Now, some petrochemical industry activists and informed sources believe that these actions are aimed at deepening the price gap between the free market and NIMA. In other words, companies are trying to have a more powerful leverage against such decisions by imposing production restrictions, in addition to supplying currency in the NIMA market. If such an analysis is accurate, which is supported by logical and valid evidence, the government should definitely expect more extensive consequences regarding its unprincipled policy in the field of monetary policy in the country.

From petrochemical company grievances to intensified inflation of essential goods.

As previously mentioned, the Nima market is the place for supplying the required foreign currency for importing essential goods. However, if this market fails to meet the demands of importers due to the anger of petrochemical companies, a simple equation will occur: if there is no currency available for sale in this market…

The government and importers will have no choice but to resort to the free market to obtain foreign currency. In other words, the government wanted to stabilize the prices of essential goods by announcing a rate of 28,500 for Nima currency. However, this action would blind the main arteries of Nima market and practically it would not be able to respond to the heavy demands of the country’s imports, especially during the New Year holidays.

Ultimately, it can be said that this imprudent decision by the government and consequently by the central bank may lead to a sharp increase in the prices of household consumer goods in the coming weeks. These goods are mainly consumed by low-income classes of society and constitute a significant portion of expenses. In summary, it can be reiterated once again that the main policies of the government in the economic sector have mostly been inflationary and are adopted in a short-sighted manner in response to various economic crises in the country.

Now, if the scenario mentioned in this report becomes a reality, it can be expected that the exchange rate of the dollar in Tehran’s free market may surpass the 50,000-toman mark even before the sound of the New Year’s bell in Farvardin 1402, and achieve a new achievement for the government of Ebrahim Raisi.