Forex Dormant, Traders Cautious

EghtesadOnline: Foreign exchange rates in Tehran started the week without fanfare as the market takes a wait-and-see approach given the uncertainty surrounding the extended nuclear talks in Vienna and the government's policy toward the forex market under the administration of President-elect Ebrahim Raisei.

News ID: ۷۸۶۵۸۸

04 July 2021

The dollar gained 0.03% and was traded at 251,900 rials in the free market, the Persian-language economic news website Eghtesadnews reported. Bank-affiliated exchange shops demanded 244,540 rials for the greenback -- 0.13% lower than the previous day.

The dollar’s rise started in late May and has jumped 8% in four weeks but the trend slowed down on Saturday. Observers say the outcome of negotiations to revive the landmark 2015 nuclear agreement is and will be a key factor impacting the forex market in the coming months.

Diplomats from Iran and the major powers in the Austrian capital are working to find ways to revive the nuclear pact abandoned by former US president Donald Trump in 2018 who imposed the toughest sanctions in history against Iran’s economy, namely its oil export, banks and insurance industries.

Ali Akbar Komijani, the former vice-governor of the CBI on   Wednesday was appointed as the new governor of the Central Bank of Iran. The market is waiting to see how he will approach the chaotic forex market.

Eghtesadnews website carried a report on Komijani's economic views last week saying that he would try to “use interest rates as an instrument for stabilizing exchange rates.”  What exactly that means is not clear.

This is while, President Hassan Rouhani is set to hand over the government in August to Ebrahim Raeisi who was elected as president in the June 18 polls. The central bank governor is also likely to be replaced after the new administration takes office.

The UAE dirham is seen as influential in Tehran's currency market. Traders say further growth in the dirham's price could push the dollar above 252,000 rials. The dirham closed the day 0.2% higher at 68,570 rials.

The euro lost 0.12% and bought 298,040 rials. Melli Exchange, affiliated to Bank Melli Iran, sold the European currency at 291,630 rials, 0.18% lower than Thursday.

Gold Down

Emami gold coin, which is popular with most Iranians, was traded at 107.5 million rials on Saturday, down 0.42% compared to Thursday's close.

Half Bahar Azadi and Quarter Bahar Azadi gold coins also declined. The former lost 0.18% and was sold at 57.5 million rials while the latter was tagged at 37.1 million rials, down 0.27% compared to Thursday's close.

Demand for gold is expected to decline in the coming weeks as emergence of the fifth wave of Covid-19 is likely to result in lockdowns and business closures in Tehran and other high-risk cities.