Currency, Gold Edge Higher

EghtesadOnline: In wake of the rising trend that started last week, the US dollar crossed above the critical 250,000 rials on Tuesday in Tehran’s open market.

News ID: ۷۸۶۷۴۹

28 July 2021

The greenback was quoted at 251,200 rials, 0.6% or 1,200 rials higher.  It has climbed almost 2.5% on last Tuesday when it bought 245,000 rials.

Likewise the euro fetched 296,000 rials to rise more than 0.3% and the UK pound sterling gained 0.44% and changed hands at 346,222 rials. The UAE dirham dropped by 0.72% or 500 rials to buy 68,900 rials.

Increase in currency rates in the border areas in the west and east of the country is seen as one of driving forces behind the upsurge, according to the Persian-language economic website Eqtesad News.

The website said the dollar was tagged above 250,000 rials in Afghanistan's northwestern city of Herat on Monday and there was high demand for the American currency in Sulaymaniyah in the Iraqi Kurdistan Region.

Increase in forex rates in the border regions often lead to increase in demand in the Tehran market as traders are allured to buy cheaper currency and sell it higher near the borders.

The currency market is also sensitive to political developments, in particular negotiations to restore Iran’s 2015 nuclear deal, known as Joint Comprehensive Plan of Action (JCPOA).

Pointing to the change of government on August 3, the website said forex market speculators don’t expect any significant progress in the nuclear talks anytime soon and before President Hassan Rouhani leaves office.

Following the upsurge in the open market, the official exchange bureaus affiliated to the Central Bank of Iran also pushed up  rates on Tuesday.

A USD was tagged at 251,800 rials at the state-run Melli Exchange, affiliated to Bank Melli Iran -- up 1,260 rials or 0.5%  compared to Monday.

However, the greenback paused in the wholesale currency market in Tehran, known as regulated forex market, where it was down 1.3% and fetched 241,100 rials, according to Eghtesad News.

Gold Surges

Higher forex rates, as always is the case, pushed up gold prices. The Emami gold coin was up 0.5% to fetch 109.45 million rials. Half Bahar Azadi coin climbed 1.7% to reach 58.5 million rials and one gram of 18-karat gold was worth 10.77 million rials, up 0.28%, the Tehran Gold and Jewelry Union said.

Gold prices in international markets lingered below the key $1,800 per-ounce level on Tuesday as investors maintained a cautious stance ahead of the US Federal Reserve policy meeting and awaited cues on the US central bank’s timeline for tightening its monetary policies, Reuters reported.

Spot gold was flat at $1,796.75 per ounce, after hitting a session low of $1,792.00, with a firmer dollar curbing the precious metal’s appeal further.

The dollar index was up 0.2%, hovering near the 3-1/2-month peak, making gold more expensive for holders of other currencies. US gold futures eased 0.1% to $1,796.90 per ounce.