New Central Bank of Iran governor appointed

Iran’s council of ministers has appointed a new governor to the Central Bank of Iran (CBI), opting not to renew the term of incumbent Valiollah Seif.

Ministers chose Abdolnaser Hemmati, formerly head of Iran’s insurance regulator, as the new central bank chief, according to a report by the state-owned Islamic Republic News Agency.

Hemmati was formerly a managing director at Iran’s Bank Melli, and he retains a position as associate professor at the University of Tehran.

The IRNA report quoted Iranian president Hassan Rouhani saying the change “has been made to bring about reforms in banking system and financial policies and improving banking relations with the world, fostering bilateral financial deals and protecting the country’s foreign exchange”.

The report observed the recent “volatile situation” in Iran’s foreign exchange market.

CBI governors are appointed for a term of five years, with Seif having taken up his position in September 2013. The central bank law allows for governors’ terms to be renewed at ministers’ discretion.

But Seif has come in for criticism amid continued weakness in the rial, and the central bank has struggled to close a gulf between official and black market rates, factors that may have counted against his reappointment.

A steady weakening of the currency against the dollar and an official devaluation in April have failed to unify the exchange rates; reported black market rates are still around double the official rate of 43,880 rials to the dollar.

A video posted on social media showed commotion in parliament as Seif tried to testify regarding the April move. State media reported at the time that some politicians had called for him to step down.

Renewed sanctions and a weak banking sector have compounded Iran’s difficulties. The International Monetary Fund forecasts a slight slowdown in growth in 2018–19 to around 4%, from 4.3% previously. Inflation, however, has come down markedly during Seif’s term, from close to 40% to around 10%.

Seif is himself subject to sanctions. The US accused him in May of facilitating transfers of millions of dollars from Iran’s Revolutionary Guards to the Lebanese militant group and political party Hezbollah, which is designated a terrorist organisation by the US administration.