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Iran’s plan to get rid of the subsidized exchange rate

Iran's subsidized exchange rate has failed to prevent the downfall of the rial — and a move to do away with it could actually help the economy.
Iranian rials are displayed in Tehran on July 31, 2019.

There are signs that Iran will officially get rid of its official subsidized exchange rate — at 42,000 rial to one US dollar — by the end of the current Iranian year on March 20, 2022. If implemented correctly, the move could actually help the Iranian economy find a new balance, but the question is whether political and socioeconomic realities will allow the government to implement a sound approach to exchange rate policy. 

Iran currently uses three different exchange rates: the official subsidized rate, the market rate, and a rate controlled by the central bank available to importers and exporters of essential goods. The latter is known as the NIMA rate.

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