Forex Rates Rise Unabated in Tehran Market

EghtesadOnline: Currency rates are rising unabated in Tehran with exchange bureaus affiliated to, and working for, the Central Bank of Iran again the increased the dollar rate by 3.65% on Sunday after the 10% rise a day earlier.

News ID: ۷۵۰۳۹۴

06 July 2020

These moneychangers for the second session in a row officially raised the dollar price by 7,610 rials on Sunday to 216,460 rials.

The latest CBI-engineered surge is with the declared aim of “reducing the price difference with unofficial rates quoted by currency dealers in the open market.”

It was reported that the regulator was “forced to increase the dollar rate” by 20,000 rials on Saturday to eliminate the “price arbitrage” that went up as high as 17,000 rials.

Unprecedented price gaps for weeks have encouraged currency dealers and speculators to line up for cheaper currency.

One euro was worth 240,000 rials in the so-called CBI-based moneychangers, up 7,000 rials compared to a session earlier -- up 3% growth overnight. The UK pound sterling jumped 3% to 272,790 rials, the Tehran Gold and Jewelry Union said.

Despite the regulator’s move to increase rates, there was still a 2% price difference between bank-based moneychangers and open market rates.

The greenback beat 220,000 rials on Sunday in the open market, up 3.5% compared to the earlier session, but retreated a little later to trade at 219,500 rials. The euro sold for 243,000 rials, up 6,000 rials compared to the previous session and UK pound sterling fetched 270,000 rials.

The unprecedented 27,000-rial increase in the price of the dollar in just two days is seen as the CBI’s bid to contain the ongoing market volatility.

It is apparent that the regulator wants to end the volatility in forex rates by pulling official rates closer to open market rates and further control prices going up by the hour.

CBI boss Abdolnasser Hemmati earlier said that the regulator would intervene in the market if and when necessary. Now it is exactly doing this without the need to conceal anything.

Gold Rises

Gold coin prices also hit new records. After breaking past the critical 100 million rials a session earlier, Emami gold coin strengthened above this level on Sunday and was sold for 103 million rials, a 3% increase over Saturday’s close.

The benchmark Bahar Azadi was worth 95 million rials, almost unchanged compared to Sunday. One gram of 18-karat gold sold for 9.3 million rials, up 2.7% overnight.

Gold prices in Iran are usually influenced more by the domestic forex market and less by the global gold market. As such, the domestic market is relatively indifferent to the surge in prices of the precious metal in international markets, where too gold prices are rising as the coronavirus continues to hammer economies in ways not seen in more than a century.

Reuters reported on Friday that gold prices were little changed in world markets,  as worries over an accelerating number of coronavirus cases countered a fillip to risk sentiment from positive US and Chinese economic data.   Spot gold was mostly unchanged at $1,775.06 per ounce.