Iran Banks Reconnect To Swift System

For any of you who have ever had to send money internatioanlly you may be familiar with Swift codes. Essentially a swift code is a "routing" number for international banks or foreign banks.

With the lifting of sanctions on Iran, Iran is currently getting reconnected to the Swift system.

Currency 365 Is Compiling A List of Banks where people can Purchase Iranian Rials - If you're bank sells Rials let him know

Currency 365 Is Compiling A List of Banks where people can Purchase Iranian Rials - If you're bank sells Rials let him know

Russia, Iran to Open Joint Bank for Ruble-Rial Settlement 

 

 

 

Iranian Stocks and Currency Gain as Sanctions Relief Looms

Iranian shares climbed to the highest level in almost five months and the rial gained as diplomats gathered in Vienna to announce the end of international economic sanctions against the country’s nuclear program.

The benchmark TEDPIX index gained 2 percent to 64,860.9 at the close in Tehran, the highest level since Aug. 23, data posted on the exchange’s website showed. The currency gained 2 percent, according to Daily Rates For Gold Coins and Currencies, a Facebook page used by businessmen based in Iran and abroad.

Iran’s Foreign Minister Mohammad Javad Zarif said sanctions will be lifted on Saturday once the United Nations nuclear agency reports that the Islamic Republic has fulfilled its commitments under July’s nuclear agreement with world powers. The move will unlock billions of dollars in frozen accounts and pave the way for a surge in Iranian oil exports as well as foreign investments into the country.

“Ultimately it’s to do with the nuclear deal and its implementation and particularly the impact that sanctions removal will have on oil exports and the wider economy,” said Masoud Gholampour, an analyst at Novin Investment Bank in Tehran.

The accord imposes restrictions on Iran’s nuclear program in return for the lifting of oil and financial sanctions that have cut off domestic banks from the international system and prevented aviation companies from upgrading aging fleets.

Companies including Parsian Oil & Gas Development Co. and Iran Telecommunications Co. led the gains, each advancing 5 percent, the maximum limit imposed by the stock exchange to reduce volatility.

“The lifting of sanctions will have a direct impact on the profitability of many companies and sectors such as banks and industrial companies, making it cheaper and easier for them to transact globally,” said Ramin Rabii, chief executive officer of Turquoise Partners in Tehran.

What to expect from Iran?

How low can oil go? For Canadians, the plunging price of oil means direct economic pain in the west, along with rising prices for food and other imports as our dollar drops with it. Those looking for clues about whether 2016 will bring a price recovery have largely focused on how the U.S.-Saudi oil-price war will play out. But attention needs to be paid to the rapidly changing situation inside Iran.
We hear about Iran mainly in connection with external factors: the nuclear deal struck last year, regional hostilities, its emerging alliance with Russia. But a closer look at Iran’s internal economic picture sheds light on the role it will play in keeping the price of oil depressed in coming years.
Iran was subject to intense sanctions for its nuclear program during 2010-2013. The sanctions hurt Iran’s economy badly and limited its ability to export crude oil. It became isolated from the international financial system and international trade, and many of its properties and assets were frozen. To deal with mounting deficits, the Iranian government slashed infrastructure budgets and administrative costs, adding to already double-digit unemployment figures.
Inflation had already been accelerating due in part to a botched subsidy-reform plan by former president Mahmoud Ahmadinejad. He cut subsidies on food and energy and planned to redistribute half of the saved money to poor people. However, due to a lack of data and other implementation problems, the government ended up simply giving cash to all households, as it could not identify who qualified for compensation. Depreciation of its currency, the rial, due to the decreased oil exports, exacerbated this problem, pushing inflation to 40 per cent.

In 2013, President Hassan Rouhani was elected on a promise of better relationships with other countries. The dramatic crash of oil prices in 2014 amplified the pressure on him to fix the economy. Mr. Rouhani made his first priority to cut inflation. In particular, his government controlled the fluctuations in the exchange rate to prevent depreciation against the U.S. dollar, and implemented extensive, contractionary policies to decrease the monetary base.

Inflation fell to 16 per cent, which was an impressive achievement considering where it had been not long before. But the policies intensified the existing recession. Iran is now suffering from weak domestic demand, in part because consumers are deferring spending based on the expectation that prices will drop due to monetary reforms and the recent lifting of sanctions.

Thus, the next challenge facing the Iranian government is to boost domestic demand, which the nuclear pact and the removal of sanctions should help bring about. The lack of sanctions will allow Iran to get its oil back to market, and the government intends to dramatically increase its capacity to export crude. Although this may further depress the world oil price, the net effect will be positive for Iran’s economy. In addition, the absence of sanctions will allow Iran to attract increased foreign direct investment, upgrade its oil fields and take aim at decreasing the unemployment rate.

So for 2016, all signs point to Iran rapidly attempting to get oil production up to full capacity as it puts the era of sanctions and isolation behind it. Even if Saudi Arabia begins to relent in its price war with the United States, and even if high-cost producers in North America reduce capacity, Iran is waiting to fill the gap.

Investors looking for clues about how the price of oil will move this year need to look past the external strategic issues that dominate news from Iran, and look at its internal economic priorities. These suggest that Iran will be a source of downward pressure on the world oil price over the next few years, which will likely make an already bad situation worse for the oil markets.

Despite Sanctions Relief, Iran’s Prospects Look Bleak

The international community has just lifted sanctions on Iran in exchange for major nuclear concessions under the deal signed last summer. But fresh lows in oil prices and poor economic performance in Iran mean that Iran will not benefit economically in the ways that critics fear or deal supporters hope.

The architects of the nuclear deal with Iran lauded 'Implementation Day,' on which the sanctions were relieved, as a watershed moment for Iran. Overnight, the United States and the European Union rolled back restrictions on Iran’s international banking activities, oil and refined product sales, and its auto, ports, insurance, shipping and airline sectors. Iran is now allowed back into elite economic circles after decades of international exclusion.

But this could hardly come during worse economic circumstances for Iran. After losing two-thirds of their value in the last eighteen months, oil prices just dipped to eleven-year lows below $30 per barrel. Analysts expect low prices for a long time, which will make it hard for resource-dependent Iran to rake in receipts. Now that sanctions have dropped, Iran plans to expand oil production by an additional 500,000 barrels per day immediately—and expand by up to 1 million barrels per day within a year, adding to a market currently awash in 1.5 million barrels per day of excess oil.

But Iran’s formidable oil supply competitors, Saudi Arabia and Russia, are not interested in making room for Iran in the market. Saudi Arabia in particular has been pumping at record high levels expressly for the purpose of pushing other producers out of the market. Moreover, political hostilities between Iran and Saudi Arabia, leading OPEC producers, make it impossible for the cartel to contemplate cooperation to increase prices and profits.

The poor economic conditions in Iran are another strike against the country. Transparency International ranks Iran 136 out of 175 in its corruption index, and Iran tops the Basel Institute of Governance list of countries with money laundering and terrorist financing risk. Additionally, the World Bank puts Iran at 118 out of 189 in its annual ‘Ease of Doing Business’ report.

As if this dismal score card was not enough, the IMF offers a grim outlook for Iran’s economy. Last month, it forecast GDP growth for 2015/2016 around zero, an increase in unemployment by about 1.5%, and a 10% drop in imports. The IMF has also called attention to troubling public debt and a banking system in disarray.

The slew of risks associated with doing business with Iran will keep international banks on the sidelines. Significantly, many of the well-capitalized, sophisticated European banks have been collectively fined billions of dollars for U.S. sanctions busting and are barred from going back to Iran. Part of the settlement these banks made with the U.S. Department of Justice involved a commitment not to expand activities with the rogue state.

In A Rich Man’s World: Iranian currency flows into city

After the removal of sanctions against Iran by the international community, the exchange of Iranian currency has started in Peshawar. In only one week, the rate of exchange of Iranian rial (IRR) has increased by 33%. Previosuly in Peshawar, IRR 10 million was equal to PKR 32,000. However, the exchange rate currently stands at IRR 10 million equal to PKR 46,000. The sanction on Iran was lifted last week.