Currency, Gold at New High in Tehran Market

EghtesadOnline: The foreign exchange market heated up again on Monday to post fresh records for the US dollar and other major currencies as they gained considerably against the plummeting rial. The dollar was traded for 156,790 rials in Tehran’s open market, another "super-resistance" level to be broken since the rial's freefall began six months ago.

News ID: ۷۴۶۰۵۲

25 September 2018

The greenback gained close to 5% on the rial in late trading, according to Tehran Gold and Jewelry Union's website. The euro was traded for 183,890 rials and the British pound changed hands for 204,920 rials. On the Website Sana, which records the average daily currency trade across the exchange bureaux,  the dollar's exchange rate was 143, 104. Sana's rate tends to be lower than the open market's as it leans heavily on the secondary market.

According to the Central Bank of Iran, only 3% of the currency trade takes place on the open market and in the form of banknotes, with the rest being conducted through the secondary market where rates are negotiated among exporters and importers.

In order to stem the rial's decline the CBI has  authorized the import of currency and gold bars by all individuals, Financial Tribune reported.

CBI Governor Abdolnaser Hemmati said on Saturday that since the bank allowed the import of hard currency by currency exchange houses and other natural and legal persons, the flow of banknotes into the country has been growing.

He added that the CBI is keeping a watch on the market and will inject hard currency if need be.

Hemmati attended a meeting with members of the Majlis Planning and Budgetary Commission on Monday. He told the MPs that until September 14 $22.7 billion had been earned in non-oil exports and called for the money to be repatriated (by exporters) to the country's "economic cycle."

He emphasized that exporters should either present their forex earnings on the secondary market or undertake imports with the foreign currency.

Colossal Challenges

Exporters complain that with Iran's foreign banking relations facing colossal challenges due to the US sanctions, they cannot simply meet the 3-month deadline to repatriate their foreign earnings as required by the CBI.

According to Hemmati, since implementation of the new forex policies on August 6, up until Sep.21, roughly €2 billion was sold in the secondary market through the online forex system Nima.

Some non-oil exporters, including petrochemical firms  mostly owned by the government or semi-state entities–have been accused of withholding hard currency earnings from the secondary market and for rates to climb further.

In a speech this month President Hassan Rouhani harshly criticized the practice which he said is tantamount to "treachery".

On Monday, the benchmark Bahar Azadi gold coin entered uncharted territory and sold for 47.51 million rials, to score a hat trick in the currency, stock and gold market and attain an all time high.

Volatility in the currency and gold markets further intensified after US President Donald Trump announced in May that he is pulling out of the multilateral nuclear deal Iran signed with world powers in 2015.