Forex at Three-Month High

EghtesadOnline: Currency rates in Tehran’s market have been rising since last week after more than three months of relative calm.

News ID: ۷۴۸۹۵۲

16 November 2019

The US dollar changed hands for about 116,500 rials on Thursday, up 40,000 rials, or 3.5%, compared to prices a week earlier. One euro was sold for 127,500 rials and the pound sterling was worth 150,500 rials.

Rates at the Central Bank of Iran-affiliated moneychangers were slightly lower. The USD was sold for 115,500 rials in bank-based exchange bureaus, according to the data from the Tehran Gold and Jewelry Union website.

The USD on Wednesday briefly touched 117,500 rials, the highest in 90 days. The greenback was traded at or near 113,000 rials for more than 70 days before climbing steadily since last week, according to Financial Tribune.

Reacting to recent forex market volatility, the CBI governor Abdolnasser Hemmati said the CBI is active and present in the market, reiterating that currency rates went up without any fundamental factor playing a role.

“From the CBI perspective, no significant change has been made in key market variables,” Hemmati wrote in an Instagram post Thursday.

“As I have always said, due to the serious risk, forex is not suitable for investment,” he said, advising investors not to put their money in the unstable currency market.

Bank-based moneychangers intervene in the market whenever the currency market fluctuates. Their interventions mainly involve balancing supply and demand using adjusted prices, and pushing for disciplinary action to curb harmful speculative activities.

Some observers ascribe the recent hike in currency prices to increase in demand as traders need to settle their payments with overseas companies before 2019 is out.

These observers sees this seasonal rise in currency prices as something normal because most overseas companies close their books at the yearend and want trade partners to settle their payments.

Gold Keeps Pace

Keeping pace with trends in the domestic forex market, the gold market has also been rising over the past week.

The benchmark Bahar Azadi gold coin was sold for 40.39 million rials on Thursday, rising from 39.9 million rials during the week.  Emami gold coin was worth 40.55 million rials, up 550,000 rials compared to a week earlier, according to the TGJU website.

Gold prices in the domestic market take influence more from the local forex market than the global gold market. The precious metal has fallen in the global market over the past days.

According to Reuters, spot gold declined 0.24% to $1,467.44 per ounce Friday but was set to rise more than 0.6% this week. The US gold futures were down 0.4% at $1,468.20 an ounce.

Gold prices fell on Friday as investors' risk appetite was whetted by comments from White House economic adviser Larry Kudlow that the United States is nearing an interim trade pact with China.

The world's two largest economies were in close touch via telephone, Kudlow said, adding an agreement could come soon.