Dollar Dips 4% in Tehran

EghtesadOnline: The US dollar paused on Wednesday following two weeks of strong rallies after Central Bank of Iran reportedly stepped in to stop further deprecation of the rial.

News ID: ۷۵۰۳۱۵

25 June 2020

ISNA reported that the CBI injected $55 million in hard currency into the market via its affiliate- exchangers.

The greenback went up to 205,000 rials in the middle of trading session on Tuesday before retreating back to 200,000 rials as trade closed.

The dollar fell further to 197,000 rials on Wednesday, losing 4% overnight as selected moneychangers increased forex supply while demand dropped as buyers preferred caution in anticipation of further falls.

Tempted to salvage earlier gains, some dealers took the sell side on Wednesday, unwittingly joining CBI moneychangers and adding to the supply side. The USD has gained 13% against the rial in the past two weeks.

ISNA said barely $3 million of the total $55 million had buyers.

One euro bought 222,000 rials down 5,000 rials compared with Tuesday’s close. The UAE dirham was worth 55,000 rials to register 3% drop.

After pushing up rates a session earlier to reduce the price difference with the open market, CBI-affiliated exchange bureaus reduced currency rates.

A dollar was worth 192,940 rials in bank-based money exchanges, down 3% compared to Tuesday’s close, according to the Tehran Gold and Jewelry Union website.

The injection of currency came despite the fact that the CBI Governor Abdolnasser Hemmati had said earlier that turmoil in currency market is temporary and the bank “does not deem it necessary to use its foreign reserves when fluctuations are short-lived”.

The senior banker, however, noted that the regulator would intervene by injecting currency in the market if the current trend continues.

Gold Loses Luster

Following in the footprints of the forex market, gold prices also retreated from their historic levels on Wednesday.

Emami gold coin lost 1.5% overnight and was sold for 83.93 million rials on Wednesday.  The benchmark Bahar Azadi took a reverse and climbed 0.6% to 82 million rials and one gram of 18-karat gold fetched 8.36 million rials, down 1%.

This is while gold prices soared in international markets. Reuters said gold surged to its highest in nearly eight years on Wednesday as rising coronavirus cases globally dented hopes of a rapid economic recovery and pushed investors towards safe haven assets.

Spot gold rose 0.3% to $1,772.43 per ounce, having earlier hit its highest since October 2012 at $1,779.06.