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Code: 42758 Visited: 347 Publish Date: Sep 10 2017 - 12:22
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Capital Market
Market Official Voices Support for Interest Rate Cut
Tehran, Sep. 10 (SENA) - An official with the Tehran Stock Exchange has voiced support for a recent Central Bank decision to cut interest rate, saying that lower rates will positively impact the capital market.

Tehran, Sep. 10 (SENA) - An official with the Tehran Stock Exchange has voiced support for a recent Central Bank decision to cut interest rate, saying that lower rates will positively impact the capital market.

“The cut in the interest rate on savings accounts will affect the stock market directly and indirectly,” said Rouhollah Hosseini Moghadam, TSE’s deputy for issuers and members.

“A lower rate will help companies reduce their financial costs and earn more at the end of the year,” he said.

In addition, he added, “by cutting the interest rate on bank deposits, the risk-free interest rate will also decrease, encouraging investors to invest in the stock market.”

The Central Bank of Iran has been encouraging banks and credit institutions in the recent years to cut the interest rate they offer on deposits, in an effort to set more capital free for manufacturing activities.

In its latest bylaw, the Central Bank reiterated that the interest rate on savings accounts cannot exceed a 15% cap, as inflation hovers at 11%.

The CBI has also considered tighter disciplinary measures for the banks violating the interest rate regulations, Hosseini Moghadam said.

In the past year, many of the Iranian banks had been offering higher interest on savings accounts than that set by the regulator.

The TSE official said he believes the Central Bank is now more determined than ever to regulate the monetary market and make the banks respect the rules.  

The CBI has recently assured banks that it will lend them at an interest rate of 18% if their daily balance is negative. So, they do not need any longer to borrow from their customers at high interests.

In the past, the banks had to pay a penalty if their daily balance was negative. They needed to pay a 34% interest to the Central Bank for the money they borrowed. That rate has now been reduced to 18%.  

 

 

 
By: Security and Exchange News Agency (SENA)
 
 
 
 
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