Currency Pre-sale as a Tool for Financing the Productive Sector: A Network Analysis from Opportunity to Threat

Part 1: Network Analysis of Strengths and Weaknesses of the New Currency Pre-sale Instrument

The new currency pre-sale instrument is an innovation introduced by the monetary policymaker with the aim of providing sustainable liquidity to the productive and export sectors of the country. Network analysis of this tool enables us to systematically examine its key components and both its short-term and long-term effects.

Components of the Network and Their Roles

1. Direct Liquidity Provision for Producers and Exporters:

This instrument allows the pre-conversion of future foreign currency assets into rials, thereby enabling companies and exporters to quickly access the operational liquidity they require.

Main Strength: Activating domestic resources and enhancing the financial resilience of the production and export sectors.

2. Increasing Market Depth and Diversifying Financial Instruments:

The new instrument plays a complementary role within the structure of the money and capital markets, reducing the traditional reliance on bank credit channels.

Strength: Developing new financial platforms, reducing pressure on banks, and directing resources toward the productive sector.

3. Reducing Liquidity Risk Due to Exchange Rate Volatility:

Converting export currency into rials within the framework of transparent contracts and traceable arrangements creates a mechanism for managing foreign exchange risk.

Strength: Increasing business confidence and reducing dependence on the volatile spot market.

4. Dependence on the Health and Transparency of the Currency Market:

The performance of this tool is feasible in an environment of relative exchange rate stability and market trust; in times of severe volatility, exporters’ unwillingness to pre-sell can undermine the tool’s effectiveness.

Weakness: Fragility in the face of currency shocks and market sentiment.

5. Risk of Broken Supportive Linkages:

If there is no effective linkage between policymaker decisions, actual market pricing, and the real needs of producers, the tool could lead to disappointment, passivity, or even crisis within the production network.

Weakness: The possibility of the pricing mechanism or allocation rules not matching real economic conditions.

6. Policy Ambiguity and Changes in Execution Rules:

If rules or execution guidelines are not clearly defined and stabilized, market agents will face confusion, leading to disruption and reduced engagement by economic participants.

Weakness: The emergence of bottlenecks and deactivation of the instrument’s advantages.

Summary of Part One

The new policy network, on one hand, propels production and exports by facilitating targeted liquidity flows and potentially reduces pressure on the banking system; but, on the other hand, there are inherent vulnerabilities and potential disruptions, including dependence on currency market stability, the level of transparency, and the strength of policy–practice linkages. The instrument’s success directly depends on its ability to integrate these key elements and the degree of operational coordination. Sustainable effectiveness will only be possible by empowering the enabling factors and fixing or removing its bottlenecks.

Part 2: Corrective Strategies and Solutions – Systemic Recommendations

A systemic examination of the currency pre-sale network tool shows that overcoming its shortcomings and strengthening its weaknesses requires a multi-layered approach and targeted interventions.

Recommended Strategies

1. Enhancing Transparency and Predictability in Instrument Execution Regulations:

• All details of the pre-sale process, pricing regulations, and the range of authority and responsibilities for parties must be fully disclosed with maximum clarity and minimal potential changes.
• Such transparency is key to increasing the trust of economic actors in the program.

2. Flexible Management Amid Currency Market Fluctuations:

• Mechanism design for adapting conversion rates and pre-sale rules under severe market changes (e.g. periodic review clauses or mutual adjustment provisions for parties).
• The use of insurance instruments and coverage of risks by the government or parallel financial markets can prevent crises in case of price shocks.

3. Strengthening the Link between Policymakers and Production/Export Networks:

• Continuous consultation with export and industrial associations for rapid feedback and timely process adjustments;
• Fast dispute resolution processes and agile supportive structures can prevent passivity or blockages from spreading.

4. Encouraging Corrective Behavior and Producer Engagement:

• Creating tiered incentives for firms that show positive participation in currency pre-sales and demonstrate fiscal discipline.
• This approach ensures liquidity flows and access to the instrument continue only in correlation with measurable positive performance—thus, network-wide performance improves and the risk of abuse or stagnation decreases.

5. Continuous Monitoring and Dynamic Evaluation of Instrument Network Performance:

• Field data analysis and ongoing review of participation rates, liquidity processes, and foreign currency/ rial transaction history are necessary to swiftly identify and resolve inefficiencies in the face of any crisis.

Summary of Part Two

Improving the effectiveness of the currency pre-sale tool and ensuring it stimulates the production and export networks requires the implementation of the above corrective strategies. The ultimate success criterion is the policymaker’s ability to activate the most sustainable network linkages (between program, regulation, market, and stakeholders) and to minimize vulnerability from structural bottlenecks. If dynamically evaluated, reformed, and adapted to the realities of Iran’s economy, this instrument can become a successful model for sustainable financing; otherwise, its capacity will remain unused, causing stagnation or even a new crisis.

Final Conclusion

While the currency pre-sale tool has significant potential in mobilizing liquidity and stimulating the production and export network, actual success depends on key prerequisites such as transparency, flexibility, continuous stakeholder engagement, and dynamic supervision. Only through ongoing activation of these elements and proactive corrections can the cycle of vulnerability be broken, achieving stability and sustainable growth.