Through the history and since 1933, the Iranian Rial has declined from 11.2 Rials per dollar to almost 33000 Rials per dollar today in the parallel or black market. At the same time the official rate has been kept at artificial level most of the time, not consistent with other macro condition of the country. Historically, however, the central bank has adjusted the official rate and brought it in-line with the black market rate but the fact is controlling foreign exchange has only short- run impact on the official exchange rate. In the long-run the official rate must be adjusted toward the black market rate, as evidenced by the behavior of the Central bank of Iran.

In recent years with sanctions on different sectors of Iran`s economy, transferring money has become such a hard issue for investors and business men who import goods to Iran and because of that we have two different rates for USD/IRR. CTC rate which is lower than market rate is for providing necessary goods and services. With relief of sanctions and reaching an agreement by Iran and P 5+1, lots of Iranian resources outside country which is estimated to be around USD 100 bn will be available to Iran`s economy and government is planning to unify these rates for USD/IRR after the agreement.

As a result USD/IRR has risen with a moderate slope despite DXY strong performance since 2014 and even had negative slope from January as negotiations between Iran and p5 +1 approached its deadline on April 2015.

Central bank of Iran has publicly expressed its belief that USD/IRR rate should be based on purchasing power parity but declared a policy of not interfering in the market exchange rate while closely monitoring it to prevent undesired fluctuations. In addition, CBI has maintained the interest rate on deposits high. On July 2015, the CBI governor emphasized that in the past two years the exchange rate witnessed 60% reduction in its fluctuations while in a single fiscal year, the equivalent rate of dollar against Rial increased by only 3 percent. That occurred when we had limited access to our foreign currency reserves due to unjustified sanctions, he went on to say. He also informed the determination of CBI to unify exchange rates in near future. Evidence and experts reviews indicate that it is possible to move towards unification of exchange rates. This policy will be implemented in due time. This is a crucial measure which, of course, requires the establishment of sufficient international banking relations and the ability of the CBI to transfer foreign exchange resources, he said.

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