On Monday the US dollar was sold for 112,000 rials at 4:00 pm local time, down 2.6% compared to Sunday’s close. The greenback was worth 116,000 rials on Saturday.
The euro was tagged at 126,000 rials, and the UK pound sterling fetched 140,000 rials.
Currencies have seen little fluctuations since late March, unlike in the first half of the previous year when the forex market shook like never before, thanks to the avaricious activities of middlemen and speculators in jacking up prices, according to Financial Tribune.
Struggling to boost the national currency, the Central Bank of Iran stepped efforts in the past months to intervene in the market by increasing supply and pusing for disciplinary measures to curb speculative activities.
The CBI stepped in following last summer’s deep volatilities after getting a go-ahead by the Supreme Council of Economic Coordination -- an ad hoc economic decision-making body comprising heads of three branches of government -- to intervene and regulate the market.
“There is no more ‘fake demand’ for currency in the market thanks to the CBI management and cooperation of moneychangers,” ISNA quoted Kamran Soltanizadeh, chief of the Association of Bureaux de Change Operators of Iran, as saying.
Commending CBI measures, he said “only those in real need of foreign currency are now present” in the market.
Key Player
Despite the fact that the CBI is a major player in the forex market, Soltanizadeh said nowadays decline in forex rates are triggered more by the supply and demand mechanism than intervention of the regulator.
He underlined the role of cyber police and other supervisory bodies in curbing illegal forex trade in the black market and social media.
“By faking prices in the social media, forex dealers used to create artificial demand,” he said.
Apart from a noticeable decline in demand for foreign currency, the bear market could be partly attributed to positive political signals and expectations of investors about the likelihood of further decline in rates once the regulated foreign exchange market opens in the near future.
French Connection
Iran’s forex market is always highly sensitive to political developments. The latest calm is partly a positive response to reports about Foreign Minister Mohammad Javad Zarif’s second visit on Sunday to France in one week.
The senior diplomat held talks with French President Emmanuel Macron in the sidelines of G7 summit in Biarritz at the weekend.
Macron had met Zarif on Friday to ease the crisis in US-Iran relations after Donald Trump pulled out the US from the 2015 international nuclear deal. The French leader proposed measures to provide Iran with an economic compensation mechanism.
For weeks reports about the soon-to-be launched regulated forex market has overshadowed forex trade.
Investors were (are) seemingly perturbed about the highly touted functions of the market in bringing discipline to the chaotic currency trade and what that has in store for them.
The market is designed to create and organize an open and transparent environment wherein currency is traded in cash via an electronic platform and its real prices are discovered.
Trade will be processed by authorized exchange offices and agent banks that operate as brokerage within the regulated market. The market will be managed by a self-regulated body created under CBI oversight.
The regulated currency market is expected to open in the coming days, though its inauguration has been postponed several times mainly due to technical issues.