Tehran Stock Exchange authorities are preparing to launch a debt market in which bonds are to be trade in foreign currency.
The move will boost foreign investment in the country and help domestic enterprises to raise funds in foreign currency if need be, Rouhollah Hosseini Moghadam, deputy head of the Securities and Exchange Organization for issuers, said, adding that the new instrument will be “essential” for the growing capital market in Iran.
Due to instability of the currency market, foreigners argue that the currency risk in Iran has been too high to manage in the past years. Officials hope that the new decision will help cut such a risk, encouraging more investors to enter the Iranian equity and debt markets.
Authorities claim they have long been working on plans to run futures market for foreign currencies and unify the dual foreign exchange rate system. Critics, however, argue that few practical measures have been taken to implement the plans.
Hosseini Moghadam told SENA that the new move will be a response to all criticisms.
He said the companies whose revenue is made in foreign currencies are allowed to publish sukuk or Islamic bonds in foreign currency in the TSE. Then, foreigners can buy those bonds, he added.
“We already negotiated with a number of big companies which were interested in publishing bonds in foreign currency in the market,” he noted. The idea is also backed by the Central Bank of Iran and the Central Securities Depository of Iran, he added.
A number of domestic commercial banks and a multinational bank based in the Middle East have already agreed to support the foreign currency bond market.