Rial Plunges to All-Time Low

EghtesadOnline: The US dollar rose again in Tehran’s free market at the close of trading week on Thursday, moving incessantly toward 300,000 rials.

News ID: ۷۵۱۱۶۵

03 October 2020

Having touched a milestone, the greenback declined slightly during the day but was traded at record highs. It closed at 299,000 rials, up 3,000 rials or 1% compared to the previous session.

Other major currencies also moved up. One euro was worth 350,460 rials, posting 1% increase or 3,550 rials. The UK pound sterling fetched 384,520 rials rising 0.66%.

Iran’s currency market was the second performing market in the last trading week with the dollar gaining 5.5%.

Reacting to the unending appreciation of major currencies against the tanking rial, the governor of the Central Bank of Iran Abdolnasser Hemmati, again blamed the turmoil on efforts aimed at spreading a negative atmosphere in the market.

In a note posted on its social media account on Friday, Hemmati pointed to reports in the foreign media about the US administration’s new plan to further remove Tehran’s financial from the outside world.

Citing ‘informed sources’ Bloomberg reported earlier in the week that the Trump administration is considering fresh sanctions to sever Iran’s economy from the outside world except in limited circumstances.

Under the plan, the administration intends to designate the Iranian financial sector under Executive Order 13902, which Donald Trump signed in January to clamp down on mining, construction and other industries.

That would not only affect banks, but also remittances, work of moneychangers and the informal money transfer system used in many Muslim countries known as the hawala.

After that Washington intends to blacklist 14 banks in Iran that have so far escaped some US restrictions. The proposal is still under review and hasn’t been sent to the controversial and embattled Trump trailing in the polls weeks before the Nov. 3 presidential elections, according to Bloomberg.

“Whether or not the plan is practical is irrelevant, but it has cast a negative shadow on the foreign exchange market,” Hemmati concurred.

Contrary to the negative reports, Hemmati said there also are positive reports about forex resources blocked oversees due to the US restrictions.

He did not provide details but news outlets reported earlier that talks are underway with countries like Iraq, South Korea and Switzerland over unfreezing Iranian assets to facilitate imports.

Hemmati again reassured the people that the CBI will do all it can to maintain stability in the forex market -- something for which the people and businesses across the spectrum are waiting for years.

Gold Higher

Gold coin prices also shot up on Thursday. The Emami gold coin rose by 8 million rials to 152 million rials, posting a whopping 5.26% rise in one day and more than 11% in one week.

Bahar Azadi gold coin was quoted at 140 million rials, up 4.5 million rials compared with Wednesday’s close. Likewise, one gram of 18-karat gold gained 2.3% to reach 13.53million rials, according to eghtesadnews.

Rising demand plus the spike in forex rates are seen as the main factors behind the unprecedented gold rally that has taken prices to historic highs.

Gold rose on Friday in global markets and was set for its best week in nearly two months as reports about US president, Donald Trump's, testing positive for Covid-19 sent investors scurrying for safe-haven assets, Reuters reported.

Spot gold was up 0.1% at $1,906.45 per ounce by 1206 GMT, having earlier hit a near two-week high of $1,916.76. US gold futures eased by 0.2% to $1,912.20.