IME’s Price Discovery Policy Should be Changed According to the New Currency Exchange Policy

Thursday, 16 August 2018

Managing Director of Iran Mercantile Exchange, referring to the government’s new currency exchange policy, said the IME’s pricing policy based on the reference currency used for base commodities and the limitation on the price discovery for intermediate goods should be changed in line with new currency exchange policies.
IME’s Price Discovery Policy Should be Changed According to the New Currency Exchange Policy
According to the IME’s International Affairs and PR, Hamed Soltaninejad said: the policy of curtailing commodity prices artificially does not help the market at all, and only allows arbitrage opportunities to provide some kind of misuse.

He added: “In the case of various commodities, including petrochemicals, steel sections and sheets, while manufacturers accepted prices lower than world prices on the IME as base prices, the control of the price of intermediate commodities does not lead to the control of the consumer goods’ prices and it only provided arbitrage opportunities for some sham producers.

CEO of IME stated: now that the government only includes 25 essential commodities to receive foreign currency based on official foreign exchange rate in its new currency exchange policy, we should change our pricing policy for the base commodities and the ceiling price for commodity competition according to the new currency exchange policy and the goods will be sold at their actual price.

Referring to a meeting of petrochemical market activists, he added that at the meeting with presence of Minister of Industry, Mine and Trade, and Minister of Oil and upstream and downstream industries, petrochemical associations and dairy industry, mineral water and beverage industry, textile and other market players in the petrochemical industry, the downstream industries ensured that, if the free exchange rates were to be used as the base price level, we would not witness any sudden growth in prices and excitement in the final goods market.

At the end, he said: the Behinyab system, the basis for allocating quotas to buyers of petrochemical products from the exchange, requires some reforms and improvements. The IME’s suggestions would be solutions such as past years’ purchases, controlling the social security insurance list of their employees and control of the electricity consumption of the producers. It will improve relative recognition of actual buyers and allocation of purchase quotas.