Euro, Dollar Extend Gains

EghtesadOnline: Price of the US dollar rose 2.45%, or 2,950 rials, on Tuesday to reach 123,480 rials in the Tehran market.

News ID: ۷۴۹۰۵۰

27 November 2019

Each euro was worth 135,440 rials, registering 1.79% or 2,440-rial growth compared to the with previous day's close. The British pound sterling, however, declined by 1.3% and was sold for 159,220 rials.

According to Central Bank of Iran website, the greenback was sold at 108,800 rials at the secondary market, known as Nima, and 120,290 rials bought one euro.

Currency rates were mostly stable in the past few weeks, except for the last week when the dollar jumped to 127,000 rials, spurred largely by the negative climate after the government raised gasoline prices and imposed quotas, according to Financial Tribune.

The National Iranian Oil Products Distribution Company (NIOPDC) said on Nov. 14 that gasoline had been rationed and prices raised between 50%-200%. The new scheme came into effect immediately.

Outlining the reasons behind the recent fluctuations in the currency market, the CBI explicitly put the blame on non-oil exporters.

"Recent trends in the market are caused mostly by exporters trying to make use (abuse) of the atmosphere after fuel prices were increased last week. They are trying to sell their forex revenues from exports at higher prices," Abdolnasser Hemmati, the CBI governor, wrote in an Instagram post.

No Demand

"Rates [today] are not real…there is no demand for foreign currency even at lower prices," he wrote.

Elaborating the point, he went on to say, "I have often said that keeping currency market stable is of crucial importance for the CBI. We do this by taking into account fundamental factors affecting the market. Our strong presence in the market will ot allow for the spread of rent-seeking.”

Market analysts say rising currency prices this time of the year are normal. They blame this on the increase in demand as traders need to settle their payments with overseas companies before the yearend.

This is because most overseas companies close their books before year is out and want business partners to settle their payments.

The senior banker emphasized that “the CBI will control the market as it has always done".

The CBI intervenes in the market via its affiliated moneychangers during rate fluctuations. Their intervention largely includes adjusting demand and supply via unconventional methods and pushing for disciplinary (judicial) action to curb speculation.

Gold Coin Down

Unlike the USD and euro, gold coin prices fell on Tuesday. According to Tehran Gold and Jewelry union's website, price of the Emami gold coin was down 1.63% or 690,000 rials to reach 42.37 million rials. With a 300,000-rial drop, Bahar Azadi gold coin was sold for 43.19 million rials.

The precious metal’s fall in domestic market could be partly attributed to the bearish market in global markets. Gold was steady on Tuesday as traders awaited further developments in trade negotiations between the United States and China while a firm equities market kept the bullion near a two-week low.

Spot gold was steady at $1,454.67 an ounce. US gold futures edged down 0.2% to $1,454.50, according to Reuters.