Tehran Market: Currency and Gold Down

EghtesadOnline: Currency rates have been of the declining order since last Tuesday amid widespread presence of the Central Bank of Iran in the market and reports about easing political tensions.

News ID: ۷۴۷۳۸۳

21 May 2019

Each US dollar, which was traded for 151,000 rials last Tuesday, fell below the resistance channel of 150,000 rials on Saturday and changed hands for 146, 500 rials.

The downward trend gained momentum Monday when the greenback briefly touched the supportive level of 130,000 rials. However, it gained value in late day trading to fetch 140,000 rials.

The euro was traded for 159,000 rials, and the UK pound for 178,000 rials, Financial Tribune reported.

Market observers ascribe the decline to CBI efforts to intervene in the market and believe that the regulator has turned to new tactics for regulating the chaotic forex market.

Balancing supply and demand for the UAE dirham, instead of the USD is one such tactic. According to Tasnim news agency, the CBI’s heavy intervention in the dirham market was the driving force behind the recent decline in rates.

This is while the regulator in the past intervened in the forex with both eyes on market mechanisms or what it otherwise known as demand and supply rules.

Dubai because of its traditionally strong trade ties with Iran, in the past was a hub for Iran’s currency transactions. Rise in the value of the dirham usually pushes up other major currencies in Iran.

It is said that the exchange rate of dirham to the rial in the Dubai market determines the dollar rate for the next trading day in Iran.

Citing market experts, the news outlet says the scale of CBI’s intervention is unprecedented. CBI Governor Abdolnasser Hemmati said earlier this month that the bank would intervene in the market “if and when it deems necessary.”

Some attribute the fall in forex rates to the de-escalation of tension between Iran and United states. Tensions between two sides intensified after US tightened economic sanctions in early May and Iran warned the three European nations (France, the UK and Germany) who signed the landmark 2015 nuclear deal that it would abandon the agreement if its legitimate economic interests enshrined in the deal are not upheld.

Tensions appeared to ease over the past week when Tehran and Washington toned down their tough rhetoric and said they don’t want a military conflict in the strategic region.

Gold Market

Gold prices in the local market also declined amid falling global gold prices and forex rates in the local market. Each Imami gold coin changed hands for 45,900,000 rials on Monday, down 1,130,000 rials compared to a day earlier. Benchmark Bahar Azadi was sold for 45,900,000 for the day.

Gold prices fell more than a two-week trough on Monday as strong US economic data underpinned the dollar, boosting its safe-haven status over gold amid global political and trade tensions.

During the early session on Monday, spot gold per ounce fell to $1,274.39, the lowest since May 3 this year, according to a Reuters report.

Stocks

After recording lethargic trade on Sunday, the Tehran Stock Market closed trading day Monday in red.

The TSE's main index TEDPIX lost 979.85 points or 0.46% on Monday to end trading at 211,871.7.

About 3.6 billion shares valued at 10.75 trillion rials ($76.80million) changed hands at TSE for the day.

Trading at TSE and over-the-counter Iran Fara Bourse starts on Saturday and ends Wednesday.

Salemin, an Iranian food industry company was the biggest winner as its shares went up 5% to 15,354 rials.

Iran Mercantile Exchange incurred the biggest loss among all TSE-listed companies and went down 4.99% to 15,656 rials per share.

Golgohar Mining and Industrial Complex contributed the most to the benchmark's fall.

Pars Petrochemical Company gave the biggest boost to the benchmark index.

Iran Fara Bourse’s main index IFX lost 10.39 points or 0.39% to close Monday trade at 2,623.1.

About 1.27 billion shares and securities valued at 6.09trillion rials ($43.52 million) were traded at the over-the-counter exchange for the day.