Gold, Forex Slide in Tehran Market

EghtesadOnline: After a concerning pattern of hikes in the price of gold and foreign currency in Tehran, both assets registered decline in Monday trade.

News ID: ۷۵۰۴۰۵

07 July 2020

The US dollar was close to 214,300 rials in the open market after touching 221,000 rials on Monday morning.

Moneychangers affiliated to the Central Bank of Iran, sold the greenback at 218,430 rials, up 0.9% compared to Sunday’s close.

Tasnim News Agency reported that demand for forex dropped as people preferred to sell fearing a possible decline in forex rates.

In sync with the small decline in currency rates, gold coin prices also fell. The Emami Gold Coin lost 6.86%, or 6.7, million rials and was tagged at 96.4 million rials.

This was the largest decline in the price of the precious metal in the past few months. The coin fetched an unprecedented 105 million rials earlier in the day.

Emami gold coin has gained 51.3% in the past three months. It has almost doubled compared to January.

Slide in the two critical markets comes after the Central Bank of Iran Governor Abdolnasser Hemmati in a note published on his personal Instagram account late on Sunday said stability would return to the currency market.

"The recent fluctuations in the forex market is the result of an imbalance in supply and demand in the ‘hawala’ market," he said, adding that the “pent-up demand for foreign currency is the result of restrictions to contain the Covid-19 pandemic in the past months. However, currency supply through the secondary market is rising."

‘Good News’

The CBI is getting “good news about access to the blocked currency resources along with revenues from oil and non-oil exports.” In his opinion this could help the chaotic state of supply in the forex market. Hemmati did not provide details.

Billions of dollars of Iranian money remains frozen in several countries, namely China, South Korea and India, due to the new United States economic sanctions.

Recent reports said Seoul alone has blocked $7 billion. Hemmati last month called on the Korean government to release the money and not flirt with the illegal and unilateral US sanctions imposed on Tehran to strangle its economy.

In his Istagram post Hemmati again warned about risks in investing in the almost permanently unstable currency market, recalling that the CBI is capable of restoring stability as “it did in September 2018”.

“If feel obliged to warn those active in the currency market and say that its investment risks have increased”.