Gold Coin Gains in Tehran Market

EghtesadOnline: The benchmark Bahar Azadi gold coin gained on Tuesday, as both gold and foreign currency markets await greater stability in the wake of the government's rescue package that was unveiled last week.

News ID: ۷۴۵۸۷۴

15 August 2018

According to Tehran Gold and Jewelry Union's website, the gold coin gained by 1.69% and fetched 39.10 million rials ($482), thereby approaching the resistance level of 40 million rials again. In the past weeks and amid its most intense volatility, the coin even hit the historic high of 45 million rials.

The traditionally popular gold coin has turned into a safe haven asset for Iranians in the wake of the most severe currency crash in recent years, which has seen the rial lose 40% of its value since April.

The currency market is struggling to adapt to new circumstances after the government eased forex rules and allowed exchange bureaux to resume currency trading at the open market rate. However, the discrepancy between the exchange rate announced by the exchangers and the ones negotiated between exporters and importers is widening by the day, Financial Tribune reported.

Adding to the confusion is the Central Bank of Iran's Sana system that quotes the average exchange rate used by exchange shops during the day. The rate tends to be lower that the open market rate, which is regarded as a weak spot for Abdolnasser Hemmati, CBI's new governor who has championed a free market approach to strengthening the rial.

The US dollar's exchange rate on Sana was 80,884 rials on Tuesday while reports from the open market suggested that the dollar was traded at around 107,000 rials. The actual rate at the exchange shops also tend to be higher than the Sana rate.

On Monday, Iran's Leader Ayatollah Seyyed Ali Khamenei criticized wrong policies that have led to market upheavals, saying that such decisions were more to blame for the economic hardships than the sanctions imposed by a hostile US.

The government decided to unify the US dollar's exchange rate at 42,000 rials on April 9 in response to volatility that saw the rial sink to all-time lows against the greenback.

At the time, it also banned the physical trade of hard currency by exchange shops and the trading of US dollar at any rate other than the official rate.

The volatility intensified after US President Donald Trump announced in May that it is pulling his country out of the multilateral nuclear deal Iran signed with world powers in 2015 and reimpose sanctions on Iran.

Earlier this month, Washington reimposed sanctions on Iran’s purchase of US dollars, its trade in gold and precious metals and its dealings with metals, coal and industrial-related software.