Nournews: Exchange rates are one of the main factors influencing trade, investment, and inflation. In Iran, due to the high dependency of the economy on oil revenues, managing the exchange rate plays a crucial role.
The exchange rate, in addition to directly affecting the prices of imported and exported goods, also impacts income distribution and economic growth. The lack of a transparent and stable currency system in Iran has led to currency fluctuations, exacerbating economic instability and making it more difficult to achieve development goals.
Structural Challenges in Managing the Currency Market
Iran's currency market faces several challenges, some of which stem from its dependence on oil revenues. A large portion of the currency available in the market is supplied by the government, which is reliant on oil exports and related products. Any reduction in oil prices or restrictions on exports directly reduces government foreign currency income and disrupts market balance. On the other hand, the limited diversification of non-oil exports and dependency on the import of essential goods have reduced the country's bargaining power in the global market.
Liquidity and Speculative Demand in the Currency Market
Another major issue is the high volume of liquidity and its entry into the currency market for speculative purposes. This behavior creates unrealistic demand for currency, leading to sharp fluctuations in exchange rates. Unstable monetary policies and the continuous growth of liquidity have intensified this pressure and hindered the establishment of stability in the market.
Solutions for Achieving a Stable Currency System
Establishing a stable currency system requires the implementation of a series of structural and policy reforms. Diversifying exports and reducing oil dependency are among the most important proposed measures. Improving domestic production efficiency, strengthening non-oil export infrastructure, and increasing the competitiveness of Iranian products can diversify foreign currency sources. Controlling liquidity and managing inflation through appropriate monetary policies is also essential. In addition to these measures, developing transparent currency markets and utilizing successful global experiences, such as those of Turkey and Malaysia, can help improve exchange rate management in Iran.
To achieve an efficient currency mechanism, Iran needs profound reforms in its economic structures. Reducing dependence on oil, smart liquidity management, and increasing export diversification can be a significant step toward creating stability in the currency market and achieving sustainable economic growth. Such changes, in addition to stabilizing the exchange rate, could also enhance the quality of economic policymaking.
NOURNEWS