Rial Erases Gains

EghtesadOnline: Major foreign currencies rallied again in Tehran’s open market on Sunday with the dollar bouncing back to 202,000 rials, up 2.5% overnight.

News ID: ۷۵۰۳۳۵

29 June 2020

One euro fetched 226,000 rials, up more than 3% compared to Saturday’s close. The UK pound sterling rose 4,000 rials to 246,000 rials. The UAE dirham was worth 56,600 rials.

The greenback climbed as high as 205,000 rials in the middle of trading session, its historic level last Tuesday, before dropping later.

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Reported increase in currency supply is said to be slowing the dollar from further advance.

Investors in the chaotic market apparently shifted to the sell side following a Central Bank of Iran report that currency supply had increased in the secondary forex market.

The CBI said in a press release on Sunday that the secondary forex market’s trading platform, known locally as Nima, recorded the highest currency sale in the past week (June 20-25).

Accordingly, €429 million was sold in this market during the mentioned period, indicating a 92% weekly growth.

The CBI said €3.3 billion has been sold via Nima since the beginning of current fiscal year (March 20).

Nima is an online platform affiliated to the CBI where exporters sell their overseas currency income and companies buy it for importing goods, machinery, equipment and raw materials. The rates are usually below open market rates.

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Increase  in currency availability sends a message to  currency investors because a crunch in Nima has been blamed for the new forex volatility.

Iranian export companies have refused to return $27.5 billion of their overseas revenue in the past two years, according to central bank officials.

Abdolnasser Hemmati, the CBI boss, said on Saturday that the regulator will tame speculative activities in the currency market.

News outlets reported last week that the CBI had injected “tens of millions in hard currency into the market via its affiliated-exchangers.

In yet another move to increase currency access in the market, the regulator increased the daily ceiling for currency purchase via authorized exchange bureaus. The purchase cap rose from the previous $200,000 per day to $300,000.

CBI-affiliated moneychangers increased rates to keep pace with unofficial market trends. A dollar was worth 190,450 rials in bank-based money exchanges on Sunday, marking 1% hike compared to Saturday’s close, according to the Tehran Gold and Jewelry Union website.

Gold at New Highs

While the bullion market by tradition is influenced by  the currency market, gold prices soared at a higher pace and surpassed forex rates thanks to bullish trends in  global markets.

Emami gold coin was traded at an all-time high of 87.28 million on Sunday, rising 2.4% overnight.  Each benchmark Bahar Azadi climbed more than 1.2% to 84.57 million rials, and one gram of 18-karat gold sold for 8.55 million rials, up 2.7%.

In global markets, spot gold rose 0.3% to $1,767.28 per ounce on Friday. Reuters said gold erased earlier losses as the relentless coronavirus spread globally with a record jump in Covid-19 infections in the United States marring risk appetite and setting the metal on track for its third straight weekly rise.