Each US dollar, which traded for 132,000 rials last Wednesday, fell below the supportive level of 130,000 rials on Sunday.
The greenback changed hands for 129,000 rials on Monday, as the bear market deepened. The euro was traded for 147,000 rials and the UK pound for 164,000 rials for the day.
According to the Persian-language newspaper Donya-e- Eqtesad, investors are not interested in the forex market because of the increasing pessimism over a turnabout in the near future, Financial Tribune reported.
After a relatively long spree of turbulence last summer, the forex market didn’t face the same headwinds during the spring, with the US dollar fluctuating between 130,000-150,000 rials.
With the forex market weakening and parallel markets thriving, more liquidity has been fled the market to automotive and stock sectors.
As per market data, the stock market was undoubtedly the top performer in the first quarter of the current fiscal year (March 21-June 21), with the return standing at 31%.
This is while gold and forex market respectively registered 1.4% and 2.4% returns during the three-month period.
Apart from lower demand for foreign currency, market analysts point to lower rates for transferring the UAE dirham via hawala as another probable factor behind the forex decline.
Due to its strong trade ties with Iran, Dubai traditionally acted as the hub of currency transactions with Iran. Any changes in the dirham rates usually affect all other major currencies in Iran.
It is said that the exchange rate of dirham to the rial in the Dubai market determines the dollar rate for the next trading day in Iran.
Gold
The gold market, which is influenced more by the domestic forex market than the international gold market, has been down in recent days as forex rates remained relatively stable.
The benchmark Bahar Azadi gold coin was sold for 43.4 million rials on Monday, down 440,000 rials or 0.1% compared with the Sunday’s close. Each Emami gold coin changed hands for 45.5 million rials during the day.
The domestic gold market behaved indifferently to the skyrocketing price surge in the global gold market in recent days.
According to a Reuters report, gold rose to $1,438.63 an ounce on June 25, its highest since May 14, 2013, as the US dollar weakened and investors sought safe-haven assets on concerns about the escalation of the nuclear dispute between the United States and Iran.
However, with the dollar gaining in strength and trade tensions between the United States and China easing, the price of the yellow metal in the global markets fell on Monday.
Gold prices fell nearly 2% on Monday to their lowest in more than a week as spot gold was down 1.7% at $1,384.81 per ounce as of 0724 GMT, after falling to its lowest since June 20 at $1,381.51.