Rial Up, Forex and Gold Down

EghtesadOnline: The national currency pared earlier losses at the beginning of trading day on Saturday as sentiment in the forex market weakened following new measures announced by the Central Bank of Iran including its currency injections to try and curb rates.

News ID: ۷۵۱۳۸۵

01 November 2020

Extending a weeklong declining trend, the US dollar lost 11,000 rials to reach 269,000 rials on Saturday -- down 4% compared to the earlier session. Gold prices also declined.

One euro was worth 314,800 rials and the UK pound sterling fetched 348,900 rials in the unofficial market -- down 5% and 4.5%, respectively.

The greenback at exchange shops affiliated to the CBI was worth 268,760 rials down 3.26% compared to Thursday.

The Persian-language economic website eghtesadnews said the UAE dirham was at the forefront of decline. It fell to 74,000 rials in the early hours of trade or more than 5% compared to the session earlier

Following currency infusions by the CBI, the dollar lost almost 10% or 29,000 rials in one week after reaching an all-time high of 322,000 rials on Oct. 18.

The CBI is of the opinion that its move to control forex rates has delivered as it offered an average $70 million a day in the forex market last week.

Moneychangers operating under CBI auspices barely bought 7% of the $450 million pumped into the market last week. As per new CBI rules, each exchange shop can buy up to $500,000 every day.

“This [lack of interest] indicates there is no significant demand for hard currency in the market,” the regulator said.

One Main Factor

Observers say the government’s recent decision to ease currency earnings repatriation rules for exporters is one of the main factors affecting sentiment in the near permanent chaotic currency market.

The government last week approved a decision based on which exporters can use their export earnings for importing goods, either for themselves or other exporting companies.

The decision was made to apparently boost the regulator’s leverage in controlling rates and improve the forex demand and supply.

In a talk with ILNA, Heibatollah Osouli, a member of the Iran Chamber of Commerce, Industries, Mines and Agriculture (ICCIMA) predicated that the decision could impact currency rates by up to 20%.

Gold Plunges

In pace with forex rates, the domestic gold market too erased past gains despite increase in the metal’s price in international markets.

Emami gold coin dived deeper on Saturday reaching 128 million rials, indicating a daily decline of 7% or 9 million rials.

Half Bahar Azadi lost 5% to reach 70 million rials and one gram of 18-karat gold could not fetch more than 11.75 million rials, down 5.7%.

International gold prices rose on Friday, as the dollar retreated, supported by worries of soaring coronavirus cases in the United States and Europe as well as uncertainty over the upcoming US presidential election.

Spot gold rose 0.5% to $1,875.76 per ounce, but was on track for a third straight month of declines. US gold futures were up 0.5% at $1,877, news outlets reported.