According to local media reports, the USD was traded for 127,000 rials in the open market, with bank-affiliated exchange rates also bringing their rates closer to the market rate.
Gold prices also fell on Monday as the benchmark Bahar Azadi gold coin was traded for 43.8 million rials($344)–a drop of 1.87% on the previous day.
The Central Bank of Iran had stabilized the exchange rate below 120,000 rials in late 2018 but forex market volatility returned in the past weeks, bringing the total price surge to 30% in two months, according to Financial Tribune.
Analysts believe that Sunday's drop was natural given the significant gain in rates in the past weeks.
Governor of the Central Bank of Iran Abdolnaser Hemmati said at the beginning of the week that forex rates in the open market would decline because imports at healthy levels simply will not make economical sense for traders.
He ascribed the recent hike in forex rates to negative reports about the possibility of the Expediency Council rejecting the Financial Action Task Force-related bills. The council is in charge of resolving disputes between the Guardians Council and Majlis.
Other reasons for the recent hike, he said, were increase in demand for hard currency at yearend and some government policies that encourage imports.
He referred to the regulated forex market and said the infrastructure for launching the market is in place. “The regulated market will likely be launched in two weeks. However, we prefer this happens in the beginning of the next fiscal year [starts on March 21].”