Decline Is the New Norm in Forex, Gold Markets

EghtesadOnline: Currency rates in Tehran were choppy Tuesday with the dollar near the 240,000-rial support level in the free market.

News ID: ۷۸۶۳۷۴

21 April 2021

It lost 4,300 rials or 1.82% to be sold at the lowest price in the past 75 days – 237,500 rials. Eghtesad News website said the greenback was lower at 236,500 in the afternoon with most traders exercising caution.

The greenback recorded negative returns for the second successive month. It lost 4% in the month to March 19, and 5.3% ending April 20.

The slide is predicted to continue in the coming days as Melli Exchange and other bank-affiliated moneychangers quoted the dollar at 229,930 rials on Tuesday.

Analysts say the 2% difference in bank-affiliated exchange shops and free market rates signals the central bank's intention to cut the dollar rate to less than 235,000 rials.

Each dollar was traded at 231,490 rials at the Central Bank of Iran regulated market, down 1.51% compared to the previous day's close.

Decline in exchange rates apparently is due to some positive developments related to talks in Vienna between Iran and the world powers to revive the landmark nuclear deal.  The talks started in early April to bring back Tehran and Washington into full compliance with the accord.

As the political climate gradually improves, sentiments of avaricious currency dealers and middlemen have weakened. They now expect a weaker dollar if and when the US under President Joe Biden rejoins the nuclear agreement and ends the economic blockade imposed by his predecessor.

Other major foreign currencies also posted drops during the day. The euro lost 1.4% Tuesday and was traded at 286.640 rials.

Melli Exchange priced the European currency at 274,380 rials, down 1.73% compared with Monday's close. The British pound bought 332,320 rials -- 3,680 rials lower than Monday.

Gold coin prices also continued to slide hitting the lowest in one year. The popular Emami gold coin lost 1.58% and was sold for 100.8 million rials.  Half Bahar Azadi coin lost 1.7% to buy 59 million rials while the quarter Bahar Azadi coin lost 500,000 rials and was quoted at 37.5 million rials.

Gold coin prices in Iran are mostly influenced by forex rates in the domestic market rather than bullion prices in global markets.

In international markets gold prices declined on Tuesday. The yellow metal inched lower after hitting a seven-week high in the previous session, Reuters reported. Spot gold was down 0.1% at $1,768.01 per ounce after hitting $1,789.77 on Monday, its highest since Feb. 25.