The increase in the exchange rate in Iran’s economy is no longer just an event in the money market; It is a process whose consequences can be seen directly in the distribution of income and wealth, purchasing power of households and economic relations among different groups of society. In a situation where the dollar rate has increased from around 60 thousand tomans to more than 270 thousand tomans in the last two years and the Central Bank’s foreign exchange policies have not been able to prevent the continuation of this trend, once again the question of the winners and losers of the devaluation of the national currency has been raised. H
Sean Raghofer, economist and faculty member of Al-Zahra University, in an interview with Khabar Online, claims that the rate of 270,000 tomans was raised in the program organization as a possible policy goal since last year. He believes that the existing foreign exchange policies are detrimental to salary earners and low-income groups and to the benefit of groups with foreign exchange income and large debtors; Groups that he believes benefit from the devaluation of the national currency.
The increase in the exchange rate in Iran’s economy no longer only means that the dollar and imported goods become more expensive; A process that can change the distribution of income and wealth and distribute the cost of the economic crisis in an unbalanced way among different groups of society. In a situation where the dollar rate has increased from around 60 thousand tomans to more than 270 thousand tomans in two years and the foreign exchange intervention of the central bank has not been able to prevent the continuation of the increasing trend, once again the issue of the beneficiaries of the devaluation of the national currency has been taken into consideration.
Hossein Raghofer, in an interview with Khabar Online, criticizing the currency and monetary policies of the country, claims that the dollar rate reaching the range of 270 thousand Tomans was targeted by the program organization since last year. He believes that the devaluation of the national currency leads to the transfer of resources from large sections of society to groups with foreign exchange income and large debtors.
Dollar targeting 270 A thousand tomans from last year
Rejecting the central bank’s justification of handing over 10,000 dollars to every Iranian to prevent the exchange rate from reaching 300,000 tomans, Raghofer considers this action as one of the most inappropriate ways of managing the foreign exchange market. According to him, maintaining the value of the national currency is a necessary policy, but to realize it, there are many other solutions that impose lower costs on the country’s economy.
This economist says about the exchange rate forecast: “Last year, a decision was made in the program organization about the exchange rate this year; This means that if the situation does not improve, the dollar should reach 270 thousand tomans.
He believes that the frequent presentation of specific rates in the media can also help to form inflationary expectations and prepare the public opinion to accept the increase in currency prices. From Raghofer’s point of view, when a specific rate is proposed long ago in the policy and media space, there is a possibility that a set of measures will be put in the way of its realization; A process that ultimately serves the interests of certain groups.
Who are the winners of devaluation of the national currency?
Raghofer considers the most important consequence of the devaluation of the national currency to be the decline in the purchasing power of labor and households that keep their income and savings in Rials. Referring to the concept of “inflation tax”, he believes that inflation practically destroys a part of the real value of income and assets of these groups, without a mechanism to compensate this loss.
According to this economist, the effects of devaluation of the national currency are not the same for all economic groups. While wage earners and low-income households face rising living costs and reduced purchasing power, groups with foreign exchange earnings can benefit from an increase in the exchange rate.
In this context, he refers to petrochemical and steel companies, whose income is part of foreign currency. According to Raghofer, an increase in the exchange rate can increase the Riyal value of the revenues and assets of these companies. On the other hand, large bank debtors may also benefit from this situation in inflationary conditions and by reducing the real value of their Rial debts.
From his point of view, the result of such a process is the transfer of resources from large sections of the society to groups that either have access to foreign exchange earnings or have a credit and financial position. In this way, the devaluation of the national currency is not only a monetary variable, but it can lead to the aggravation of economic inequality.
domestic policy; The main culprit of inflation
In evaluating the current inflation formation factors, Raghofer considers the contribution of domestic politics much more than the consequences of war. He estimates that 80 to 85 percent of inflationary problems are caused by domestic policies, and the share of war is 10 to 15 percent.
Of course, these figures are personal estimates of this economist, and determining the exact contribution of each factor requires independent data and calculations. However, Raghofer emphasizes that attributing economic problems to the war, without examining the role of domestic decisions, cannot provide an accurate picture of the roots of the crisis.
The full text of this conversation from here read
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