Central Bank: Necessary measures to safeguard monetary and foreign-exchange stability are underway

According to the “Sedaye Sama” news outlet, the Central Bank of the Islamic Republic of Iran, in view of recent developments in the foreign-exchange market and increased volatility, and while continuously monitoring market conditions and economic variables, informs the public of the following:

The current conditions in the foreign-exchange market are not unknown to the Central Bank. In 2018 and 2020, the country’s economy also experienced periods of heightened uncertainty, external pressures, and increased precautionary demand. Under such circumstances, even when the initial source of shocks lies in political, security, or economic developments outside the realm of monetary policy, their effects can become visible in the foreign-exchange market.

The Central Bank’s assessments indicate that the current exchange rate level is not fully consistent with the economy’s underlying fundamentals, and that a significant portion of the gap that has emerged is influenced by heightened uncertainty, psychological pressures, and market expectations. Experience from previous periods has also shown that as expectations ease and calm returns, such gaps can adjust.

The Central Bank’s objective is not to defend a specific exchange rate or figure; rather, its mandate is to maintain monetary and foreign-exchange stability and prevent volatility that lacks fundamental backing from becoming entrenched.

Within this framework, buying and selling foreign currency and gold, as well as intervening in the market to manage volatility, are among the Central Bank’s legal duties and instruments under the new Central Bank Law. The Central Bank will also strengthen its reserves when appropriate so that it has sufficient capacity during periods of pressure to manage the market and take effective action.

The timing, scale, and method of using intervention tools will be determined based on market conditions, the needs of the economy, and the adequacy of reserves. Whenever the Central Bank deems legal intervention necessary to return the market to a path more consistent with economic realities and to preserve stability, it will use its legal instruments without hesitation.

While welcoming criticism and expert views, the Central Bank emphasizes that its decisions and actions are based on professional assessments, economic data, and consideration of the national economic interest.

The Central Bank continuously monitors developments in the foreign-exchange market and, whenever necessary, will take the required measures to safeguard monetary and foreign-exchange stability, manage volatility, and prevent the formation of non-fundamental trends in the market. / IRNA