Forex, Gold Not Losing Clout

EghtesadOnline: The US dollar made a strong comeback on Wednesday in Tehran’s open market after a steep decline a session earlier. Gold prices also followed suit.

News ID: ۷۵۱۳۲۴

22 October 2020

After a temporary hiatus on Tuesday, the greenback clawed back to above 280,000 rials and closed Wednesday trade at 288,000 rials to pare 3.5% of earlier losses.

Following currency infusions in the market by the Central Bank of Iran, the dollar lost 12% to reach 278,000 rials in the open market on Tuesday. Other major currencies and gold also slipped.

One euro was worth 341,200 rials and the UK pound sterling fetched 375,000 rials in the unofficial market -- up 3% and 1.3%, respectively.

Moneychangers affiliated to the CBI quoted two different rates for the dollar on Wednesday. Melli Exchange, affiliated to Bank Melli Iran demanded 287,000 rials from buyers and offered 251,000 rials to sellers.

The CBI says it is pumping currency in the highly chaotic market for seven days. In a press release on its website the bank said it offered $60 million in hard currency in the regulated forex market on Wednesday.

Moneychangers operating at regulated market bought only $1.7 million, according to the CBI. As per new rules, each exchange shop can buy up to $500,000 every day.

“This shows that there is no significant demand for hard currency in the market,” the regulator said.

The regulated market is a network of banks and certified moneychangers working under CBI supervision and dealing in wholesale trade.

The CBI also said the secondary forex market, known as Nima, has also seen increase in offers. “Exporters sold $191 million in the form of hawala on Wednesday,” the CBI said.

Nima is a trade platform operating under the central bank oversight were exporters sell their overseas earnings and importers buy for imports.

Gold Keeping Abreast

As expected, gold prices in the domestic market followed the trend in the forex market. The Emami gold coin bounced back to above 140 million rials on Wednesday to close at 141 million rials, up 2% compared to earlier session. Quoted at 137 million rials, the coin plunged by 20 million rials or 14% on Tuesday.

The half gold coin was worth 76 million rials, indicating 2.6% growth compared to a session before. One gram of 18-karat gold bought 12.7 million rials -- up 1.7% overnight, according to eghtesadnews.

Gold prices rose to a one-week high on Wednesday in international markets as the dollar weakened on renewed hopes for a new US stimulus package ahead of next month’s election.

Spot gold was up 0.5% at $1,915.66 per after hitting its highest since Oct. 13. US gold futures rose 0.2% to $1,919.20 per ounce, Reuters reported.