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.