Forex, Gold Move Higher in Tehran

EghtesadOnline: After a brief halt on Thursday, forex rates resumed rally at the start of the trading week on Saturday with the dollar gaining more than 5,000 rials in Tehran’s open market.

News ID: ۷۵۰۸۹۶

06 September 2020

The greenback surged to 247,000 rials -- up more than 2% compared to 242,000 rials a session earlier.

Other currencies were soon to follow. The euro climbed 1.7% and was worth 292,000 rials.  The British pound sterling surged to 327,700 rials and the UAE dirham bought 67,150 rials, up 1.3%.

Foreign currencies paused briefly on Thursday after the Governor of the Central Bank of Iran Abdolnasser Hemmati said hard currency would be injected into the market.

In a press release posted on CBI’s website, Hemmati said Thursday that there is sufficient supply of foreign exchange hawala in the secondary forex market, known as Nima, and that the regulator would make available sufficient amount of hard currency.

Nima is an online platform affiliated to the CBI where exporters sell their overseas currency income and companies buy for importing goods, machinery, equipment and raw materials.

Increase in Hawala Trade

“The value of forex hawala trade exceeded €1 billion from the beginning of the current month [August 21], which shows increase in currency offer by exporters”, the CBI chief said.

“The central bank started meeting market demand for foreign currency since Tuesday and will continue to do so in the coming days with the aim to create a balance and stabilize the market.”

In the secondary market, the dollar hawala buying price remained unchanged compared to the session earlier and was quoted at 211,465 rials. The greenback, however, was sold for 205,488 rials, down 2,600 rials, or 1.27%, the Tehran Gold and Jewelry Union reported.

It had shot up 3% during the last trading week, from 233,000 rials earlier in the week to 242,000 rials on Thursday.

Despite persistent reassurances by the government, particularly Hemmati, about stabilizing the currency market and bringing down the systemically rising rates,   it appears that the market volatility is driven also by political tensions. A group of experts and market observers partially link the forex volatility to the United States further tightening economic sanctions against Iran.

Iran has been under tough US economic sanctions for the past four decades. Last month, media outlets quoted the rabidly anti-Iran US secretary of state, Mike Pompeo, as saying that he would be going to the United Nations activate a "snapback" mechanism in the 2015 Iran nuclear deal that would restore international sanctions on Iran.

The decision, however, is strongly opposed by countries party to the historic Iran nuclear deal plus the other permanent and non-permanent members of the UN Security Council.

Gold Surges

As is always the case, gold prices also surged in the follow-up to the rising currency rates. The benchmark Bahar Azadi gold coin gained 2.8% to reach 110 million rials, according to the TGJU website.

One Emami gold coin was worth 113.84 million rials, closing the session 3 million rials higher, or 2.7%. A gram of 18-karat gold declined by 0.38 % and was worth 11.02 million rials.