Maintaining the competitiveness of the economy by suppressing the exchange rate
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A member of the Iranian House of Representatives believes that successful economies and those with booming production and economic growth often try to prevent their national exchange rate from rising.
According to the International Iranian Stone Exhibition, Alireza Kolahy Samadi, a member of the Iranian Chamber of Deputies, said: "The issue of the impact of the exchange rate on the Iranian economy is mainly related to the story of the Dutch disease." We suffered from this complication in two stages in Iran's economy. Once since 1973, when oil revenues increased and entered the country's economic cycle, many of our regional economic competitors invested outside the economy. In an economy that did not have the capacity for this amount of liquidity, it created the Dutch disease. However, I believe that the name of this disease should be changed to Iranian disease. Because we took this disease to another level of destruction.
He continued: the second time goes back to the previous government; In fact, the study of economic charts shows that we had entered a new economic paradigm in the reform government and the Iranian economy had reached a turning point, at the end of which the Iranian economy would grow in double digits and inflation would be in single digits. But unfortunately in the ninth and tenth governments, with the wrong policies, they increased inflation again.
He stressed: "In governments that have access to foreign exchange resources from the sale of natural resources, the first reaction is to curb inflation by increasing imports." And well, in a situation where we are involved in inflation at home, this increase in imports with a virtually subsidized currency (the currency that is obtained by the country's natural resources) destroys GDP. And this happened in Iran, and this destruction makes the country's economic cycle more dependent on currency. An example is that in 1997-1997, we exported tomato paste from Iran, while at the end of the tenth government, we imported tomato paste and the country's import volume reached $ 80 billion, which is dependence and addiction. The importation and, on the other hand, the disappearance of many industrial circles, because they were not able to compete with the imports that actually benefited from the sale of the country's oil, these two cases made the Iranian economy more dependent on currency. And we still have not been able to break free from this cycle.
Kolahy Samadi clarified: Although in the reform government, prices were not so dependent on external rates and stickiness. We did not see the prices of meat, poultry, etc. move in the same way as the exchange rate. Iran had its own price and abroad had its own price. And this is similar to many of the world's major economies, such as Indonesia, China, etc., although we are also a large country and we should not be subject to exchange rate fluctuations so much. Successful economies and those with booming production and economic growth often try to prevent their national exchange rate from rising. In fact, they are suppressing their exchange rates in such a way that they can maintain the competitiveness of their economy. As you can see, in the discussions between the European Union, the United States and China, and in the discussions that the World Trade Organization had with China, the main accusation is the suppression of the RNB rate, and they say that China artificially supplied the RNB rate. Holds B down.
He added: "One of the evidences of this is that the Chinese government regularly buys dollar bonds with its own surplus resources and its assets in this case have reached more than $ 3 trillion. The path we took in the opposite direction; Of course, our economy has become ill in such a way that we do not have good production growth and we are also suffering from stagflation. Labor harms production and employment. But it manages inflation to some extent, and if the exchange rate is abandoned, it will lead to a jump in inflation. On the other hand, because the economy is not ready and its trade relations with the target market are not defined, as a result we do not see export growth. In fact, we are stuck in a place where we eat the issue of exchange rates from all sides.
The member of the Iranian House of Representatives continued: "With the increase, our exports to other countries will not prosper, and on the other hand, inflation will occur and we will reduce production, leading to the loss of production."
Kolahy Samadi replied: The solution is to stabilize the Iranian economy for a while; Put aside political games with exchange rates and moves that try to keep the exchange rate at an unrealistic level that eventually gets out of control and causes a jump; Let us not fall into these paradigms, so that we can maintain a stability in the economy that can boost the country's production and economic actors can have a vision for a while. We should all know that in conditions of instability and instability, rooted activity is never formed in a principled way, and only speculative activities are attractive in these conditions, and finally, most of the country's capital goes to speculative activities.
