The foreign exchange market has experienced fluctuations in the past week, the remnants of which will include the commodity market. In this note, we examine the details of this issue. Please be with Artan Press.
*** Reasons for the high price of the dollar from the head of the Central Bank
Just a few weeks ago, the Governor of the Central Bank was the guest of the Expediency Discernment Council to explain the reasons for the appreciation of the dollar and the unprecedented fall of the national currency to the participants. In this forum, Abdul Nasser Hemmati was widely criticized and practically concluded. Exchange rate control was assessed at high prices, which could complicate the process of commodity trading.
*** Introducing exporters to judicial authorities
The central bank’s focus must shift from the process of attracting export dollars. We found out that in this meeting, the order to introduce 18,700 exporters of goods on charges of non-return of currency to the judiciary and even exporters who are under the banking law was part of the work that alone could bring the dollar exchange rate in the industrial sector. . Seventy percent of these activists have fulfilled their obligations or their export estimates are very small, which only prolongs the process and makes the output difficult.
*** Lack of transparency in providing export currency
Nowhere in the world and in no country are the exporters of goods prosecuted. It is interesting that by examining the list of 18,700 people and negotiating with some companies, it has been determined that the export currency in the form of goods or currency, etc. has been returned to the country, but in practice the names of these people have not been removed from the list. Sometimes the government bureaucratically waits for the order to be registered (goods at customs or on the way to the country) or waits for special regulations to register or order the goods, which disrupts the flow of money into the country.
Therefore, the non-entry of money into the Central Lank is not entirely due to the unwillingness to deliver the goods. This discourages exporters and makes the international trade environment insecure. In such a situation, the export of commodities will be difficult.
*** Welcoming expansionary policies to control commodity prices
Another action of Dr. Hemmati was the decision to bring $ 50 million to the market daily to reduce dollar fluctuations below 30,000 Tomans. This issue should be on the agenda sooner. Because in the current situation, such as the Corona crisis and industrial sanctions, all the economies of the world have pursued expansionary policies, and in the current situation, the government should increase the purchasing power by printing money and help supply more dollars to the society. The increase in the supply of the dollar paved the way for a steady decline in the dollar.
*** US election shadow on steel pricing
The volatile days of the dollar continue in the foreign exchange markets, and this situation seems to continue at least until the US presidential election. Given the small differences between Joe Biden and Donald Trump in various polls, predicting a successful election with the lowest error rate and therefore dollar orientation is not easy, and traders disagree on when to buy or sell dollars. The presidential election will be held on November 3, but due to the lengthy process of announcing the results, this process is likely to be slightly delayed.
This causes companies operating in the Iranian commodity market to experience heavy challenges at the current price of the dollar. Therefore, the government decided to reduce the dollar rate for commodity companies’ transactions in the current situation, and this issue started with the reduction of the Sanai dollar rate in Bilt, which made the conditions better and more attractive for the final consumer of steel ingots.
*** Weakening of the euro, the green light for the depreciation of the Sanai dollar
The European Union’s statistics center said in a disappointing report that the euro’s depreciation in financial markets had begun and that the dollar had weakened in value. In the current situation, the average inflation rate in the 19 member states of the Eurozone in the 12 months to September has decreased by 0.2% from the same figure last month. This provided the Central Bank of Iran with the conditions to be able to reduce the exchange rate for strategic goods for at least a few months in order to best implement the expansion policies of the steel sector.
Continuation of this trend will lead to more competitive Iranian steel market. Also, the continuation of this issue can help stabilize the base steel prices.
*** Correction of the dollar exchange rate in the commodity exchange
The dollar price of the commodity market Exchange for Khuzestan Steel Billet with the symbol of Fakhuz has been reduced from 27272 to 23953 Tomans with an order to correct the percentage in the dollar rate and the ingot price has been reduced from 11.1 million Tomans to 9.76 million Tomans to satisfy downstream stakeholders including rebar producers. . Meanwhile, the price of the Senate dollar rose from 28,500 to 29,200 during the same period, and the world price of steel was bullish.
*** Consequences of continuing the grammatical correction of steel rates
In the current situation, the government relies on the country’s oil export markets, industries and mines. If any order is taken at the rates of this sector, it will have serious consequences for Iranian industry. In the short term, these expansionary policies are very encouraging, but the depth must be determined. If the fall in the price of the dollar continues in the obligations of producers, we will see a drop in prices in the domestic market, which will hurt the exports of steels and other minerals, and by reducing the entry of dollars into Iran, the entire economy will suffer.
*** Reducing the export of commodity
The decline in commodity exports in the current situation will reduce the dollars in the foreign exchange reserves of the central bank, which could in the short term increase the exchange rate in dollars and euros.
. Therefore, more attention should be paid to domestic steel prices and domestic and export prices.
*** Activists are worried about the decline in sales of commodity market
Recent measures, including the reduction of the Sana’i exchange rate in commodity market exchange transactions in the form of new regulations, have been taken by the Steel Market Regulatory Committee by Samat, which, of course, is a cause for concern. Petrochemicals. Note that opaque dollar exchange rates for commodities will stimulate domestic demand and reduce exports, and in the medium term will increase the dollar exchange rate and losses to various economic sectors.
*** The impact of the depreciation of the dollar on the recession of petrochemical and oil markets
This can also affect the oil and petrochemical markets and disrupt their export process. Focus on the domestic feed of industries. Although this pricing method is responsive in the short term, it should be controlled and its duration should not be extended to Daraza.
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