Iran Economy in Brief – No. 31

Multiple Exchange Rate: The First Obstacle for Foreign Investors

If Iran is determined to get foreign investors in the country, it is essential to offer them a single currency exchange rate.

It is more than five years that the economy is experiencing multiple exchange rates again.

In September 2012, as a result of sanctions, the market exchange price suddenly jumped to 32000 IRR from 19000 IRR. At this point the gap between the market and official price reached a maximum of 160%.

In 2014, the Central Bank increased the official exchange rate by 100%. With all the effort the Central Bank hast put in work, today the gap is 14%.

Currently 1 USD officially and at the market is equivalent to 30885 IRR and 35104 IRR, respectively.


Read More Brief History of Exchange Rate in Iran

Source: Central Bank of Iran

 Illegal Power Users Around the Capital

Power Distribution Company of Tehran says that there are 70 to 90 thousands non-registered users in the province of Tehran who use the electricity illegally.

Fast growing suburban areas around Tehran has caused many households to have no document for their buildings. Without such documents they cannot register for electricity, gas or water.

Considering an average electricity bill in Tehran to be $10, the illegal consumption for the Power Distribution Company of Tehran costs 4 to 5 million dollars per year.

Electric power consumption in Iran is nearly 2900 kWh/year per capita.

Missing balance between demand and supply

Constant fluctuations in sugar price has hurt many manufacturers.

The largest victim has been Sugar Refinery of Varamin, one of the oldest manufacturers in the province of Tehran.

Sugar refineries and related industries are highly dependent on the Governmental subsidies on the imported raw material.

One scenario asks that why the production capacity should have been increased up to 5 million tons per year when the national market is less than 3 million tones?

Sugar Refinery of Varamin was “privatized” during the past Government and since then it has been continuously fighting to survive.

Whether it will come back to life once again remains to be seen.