Forex Climbs After 2 Weeks

EghtesadOnline: The currency market, seemingly in calm waters for almost two weeks, shot up Thursday triggered by negative political developments.

News ID: ۷۴۷۵۴۳

15 June 2019

The US dollar rose 4% in the open market and was sold for  136,500 rials on Thursday, up about 6,000 rials compared to   Wednesday’s trade. The euro was exchanged for 154,500 rials and the UK pound fetched 174,000 rials.

Governor of the Central Bank of Iran was quick to warn that the  price surge is transitional and influenced more by political developments rather than economic fundamentals.

Abdolnasser Hemmati blamed Thursday’s hike on opportunist dealers who always seek to “shake the forex market by riding high on negative climates” born out of political developments, Financial Tribune reported.

“Fundamental factors determining the forex rate in the market have not changed,” Hemmati told state TV on the sidelines of a tour of East Azarbaijan Province.

“We monitor the demand for currency as well as [currency earnings] from exports.”

He was referring to the visit of Japan’s Prime Minister Shinzo Abe to Tehran and Iran’s stance toward negotiations with the United States. The two countries do not have diplomatic relations for four decades.

In a meeting with Abe, the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei said on Thursday that Iran will not negotiate with the US because the mercurial President Donald Trump “does not deserve it.”

The Japanese leader, heading a high-ranking delegation arrived in Tehran on Wednesday for a two-day visit. He conveyed a message from Trump calling for negotiations with Tehran on  the nuclear program he walked away from in the summer of last year.

The meetings come amid high tensions between Tehran and Washington. Iran-US tensions heightened after Trump last year pulled out of the 2015 nuclear deal Iran had signed with the six world powers.

Before departing for Tehran, Abe said his country aims to do "as much as it can" to ease tensions and promote peace and stability in the Middle East, as a brewing confrontation between Iran and the US stokes fear of another military conflict in the region.

As a close US ally that also has good diplomatic relations with Iran, Japan was expected to mediate between the two belligerent countries.

Hemmati talked about the allocation of $9.5 billion for importing goods since the beginning of the current fiscal in March, trying to reassure the people that there is no concern about foreign reserves.

This is while the forex rate in the bank-affiliated exchange bureaus was unchanged on Thursday.  Registered money changers intervene in the market whenever forex rates rise.

Rate in bank-affiliated money changers is currently below 130,000 rials for each USD.

Hemmati had said earlier that the bank would intervene in the market “if and when it deems necessary.”