Iran’s central bank chief dismissed for running for president
Tehran, Iran – President Hassan Rouhani has dismissed Iran’s central bank chief, Abdolnasser Hemmati, for becoming a presidential candidate in the June 18 election.
The cabinet said in a statement on Sunday that Hemmati had
been dismissed as his candidacy “prevents him from having enough presence at
the central bank and performing the vital duties and responsibilities of the
governor in the sensitive areas of money and foreign currencies”.
The cabinet voted to replace Hemmati with his deputy, Akbar
Komijani, who also replaced Hemmati in an economic meeting chaired by Rouhani
on Sunday.
Komijani has been deputy governor for the past seven years,
and has about two decades of experience in the central bank.
Had he not been sacked, Hemmati would have led the central
bank until 2023, after which his governorship could be extended for another
five-year term.
Ebrahim Raisi, considered by far the frontrunner in the
elections, remains in his post as the head of the judiciary.
A veteran of Iran’s banking and insurance sectors and a
former journalist with state television, Hemmati took the helm of the central
bank in July 2018 at a tumultuous time when Iran’s currency, the rial, had
already taken a major hit.
The rial was in freefall as then-United States President
Donald Trump had abandoned Iran’s 2015 nuclear deal with world powers in the
previous May, imposing harsh unilateral sanctions.
Hemmati’s predecessor, Valiollah Seif, became the target of
judicial probes and several of his deputies were arrested. A top prosecutor
said earlier this month that an indictment has been issued against Seif for
“wasting” more than $30bn and 60 tonnes of gold reserves.
But the rial continued its steep devaluation under Hemmati,
and hit a nadir of 320,000 against the US dollar in the open market in October
2020, while it changed hands for less than 40,000 per greenback before the
Trump administration’s “maximum pressure” campaign on Iran.
The beleaguered currency has since partially recovered and
had strengthened to a rate of about 210,000 per dollar last month as talks in
Vienna to restore the nuclear deal and lift US sanctions continue. But it has
since devalued again, and reached 240,000 to the US dollar on Sunday.
A dependent central bank
Iran’s central bank suffers from an acute lack of
independence from the government, and excessive money printing has been one of
the top factors contributing to rampant inflation in the past four decades.
Legislation to boost the regulator’s independence has lagged
in several parliaments for more than 10 years.
In this climate, presidential candidate Hemmati has been
trying to push back against a narrative by critics who say he is one of the
main authorities responsible for current economic difficulties that include
inflation of more than 40 percent.
He said earlier this week he has risked his reputation to
change longstanding exchange and monetary policies, and said the economic
situation could be much worse if not for him standing up to those who wished to
maintain the status quo.
In an election that is expected to have low voter turnout
amid public disillusionment, the candidate has also said wishes to be the voice
of the “silent majority”.
Hemmati was among those to oppose a controversial policy
initiated by the Rouhani administration in 2018 to set an artificial rate of
42,000 rials to the dollar to forcefully “unify” the country’s multiple
exchange rates. That rate still persists to this day, but is only used for
imports of essential goods.
But he is of the same mind as Rouhani and his moderate
administration on a number of issues, chiefly on the necessity of ratifying the
remaining financial transparency legislation to complete Iran’s action plan
with the intergovernmental watchdog, the Financial Action Task Force.
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