Iran's CB Says Not Discomfited by Forex Volatility

EghtesadOnline: The sharp increase in currency rates will not change the Central Bank of Iran's approach toward the market, the CBI governor said.

News ID: ۷۸۵۴۳۵

29 February 2020

Responding to ongoing fluctuations in the forex market, Abdolnasser Hemmati said the CBI will not despair or be pushed into excitement due to the turbulences visiting the already fragile foreign exchange market, Financial Tribune reported.

"Some market players are trying to undermine the currency market stability…Our response to market volatilities will be premised on sagacity. We will continue to use our tools wisely to eliminate rent-seeking operations and stabilize the market," he wrote on his Instagram account.

He again cautioned the public to steer clear of the "psychological trap" created by avaricious middlemen rent-seekers.

Upsurge in currency rates is largely seen as a consequence of the decision by Financial Action Task Force on Friday to place Iran on its blacklist.

The decision strengthened major currencies against the rial on Saturday with the US dollar gaining more than 7% compared to Thursday’s close. USD hit a nine-month high to reach 156,000 rials in Tehran’s open market before retreating a bit later.

The greenback lost some ground on Sunday and was traded at 152,000 rials. Each euro changed hands for 164,000 rials.

Melli Exchange, affiliated to Bank Melli Iran, tagged the US dollar and euro at 146,500 rials and 157,000 rials, respectively. Bank-affiliated moneychangers function as the Central Bank of Iran's arm for market control.

Almost all the other currencies experienced 0.5% to 1% increase in prices on Sunday, according to the Tehran Gold and Jewelry Union website.

Fears arising from the decision and angst over further devaluation of the rial hurled many towards moneychangers and currency dealers, pushing up dollar demand to levels unseen in recent years.

The global anti-money laundering watchdog blacklisted Iran after Tehran failed to comply with international anti-terrorism funding norms.  “The FATF fully lifts the suspension of counter-measures and calls on its members and urges all jurisdictions to apply effective counter-measures,” the watchdog said in a statement in Paris.

Keeping pace with the dollar, gold prices dipped in Sunday’s trade. The Emami gold coin dropped by 0.9%, or 520,000 rials and was worth 56.74 million rials, according to TGJU.

Bahar Azadi gold coin was traded at 56.5 million rials during the day, marking 1.77% decrease compared to the previous day's close.