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NDF Vice-president:

NDF FX Basket Diversification to Support Development and Execution of Projects/Entering Pegged Currency (MANA)

  • 18 September 2022
  • 13:55
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NDF FX Basket Diversification to Support Development and Execution of Projects/Entering Pegged Currency (MANA)

Elaborating on NDF facilities, NDF Banking and Credit Vice-president said:"Through the new procedures of Pegged Currency (MANA), FX facilities would be not in single foreign currency but from a diversified basket of currencies, facilities calculations would be done in foreign currencies, transactions are conducted in National currency and FX fluctuation effects would be borne by the applicant."

 According to a report released by NDF Public Relations Department, NDF Member of Executive Board and Vice-president Mir Mohammad Sadeghi, in the meeting to introduce  Pegged Currency (MANA), stated: "purchase of equipment, funded by FX and sectoral facilities, usually requires facilities in Rials and conversion of foreign currencies to Rial, as one of the challenges the applicants face, has been dealt with in Mana contracts."

Highlighting the fact that under  Pegged Currency (MANA), FX facilities would be not in single foreign currency but from a diversified basket of currencies, Sadeghi added, "besides providing applicants with facilities in national and foreign currencies, we have designed a financing process based on agency contracts aimed at preventing the conversion of NDF foreign currencies to Rials." Within such a process, facilities calculations would be done in foreign currencies but transactions are implemented in National currency while FX fluctuation effects would be borne by the applicant, noted NDF Vice-president.

According to Sadeghi's statements, preventing foreign currencies conversion to Rials, decreasing the overload of project financing applications on banks, concurrent provision of national and foreign currencies, preserving the value of NDF resources, contribution to national production, and creating more employment opportunities are some of the positive consequences of  Pegged Currency (MANA) , NDF Public Relations Department adds.

A currency peg is a policy in which a national government sets a specific fixed exchange rate for its currency with a foreign currency or basket of currencies.Pegged currencies can expand trade and boost real incomes, particularly when currency fluctuations are relatively low and foresee no long-term changes. Without exchange rate risk and tariffs, individuals, businesses, and nations are free to benefit fully from specialization and exchange.

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