Iran's Central Bank Governor Mohammad Reza Farzin said the bank has no plans to increase the IRR700,000 exchange rate, citing past experiences of severe inflation following currency devaluations, Afrinesh newspaper reported on September 2.

Iran operates multiple exchange rates, including the preferential rate of 285,000 tomans for essential imports and the 700,000 toman rate at the exchange centre, alongside unofficial market rates that trade significantly higher. Currently, in the free market outside of the CBI's control, the exchange rate is sitting at IRR1.03mn to the US dollar, up on recent weeks, due to pressure from the US and Europe over future snapback sanctions. 

Farzin addressed speculation about currency rate unification during a private-public sector dialogue council meeting in Tabriz, emphasising that the central bank will not raise the exchange centre rate.

The governor said the bank cannot transfer inflation to goods and services by increasing the preferential exchange rate of IRR285,000 and the IRR700,000 exchange centre rate, as past experience shows such actions lead to severe inflation in commodities.

Farzin confirmed the central bank will continue allocating and supplying currency at 28,500 tomans because basic commodities remain important, and removing this rate would certainly affect the prices of essential goods.

"In the country's current conditions, this action is not possible and the central bank has no such programme," he said.

The governor noted that current conditions in the unofficial market are entirely dependent on expectational issues, and with reduced inflationary expectations, this rate will also decrease.

Farzin said past experience demonstrates that increasing exchange rates transfers inflation to goods and services, causing many commodities to face sharp price increases.

The central bank governor acknowledged that tolerating current conditions, given existing expectations, is difficult, but expressed hope that planned measures will reduce those rates.