Last week, the CBI had also ended the sale of gold coins with one-month maturities. The presales, which are taking place through Bank Melli Iran, are meant to stabilize the extraordinarily bullish gold market and, by extension, the foreign exchange market.
Masoud Rahimi, director of CBI’s Office for Banknote Issuance, had said on Saturday that the bank is stopping gold coin sales with short-term maturities because due to high demand, the bank cannot mint coins within the deadline.
Analysts also point to CBI’s intentions to prevent inflationary expectations in the gold market by shifting to long-term sales, Financial Tribune reported.
The gold coin had been bullish for the past several months and CBI’s efforts, including auctions and presales, have failed to achieve the results sought by CBI. In the early days of the current fiscal year that began on March 21, its price surged past the landmark 19 million rials ($452).
On Sunday, Bahar Azadi fetched 18.30 ($435), slightly down from the previous day’s close, according to Tehran Gold and Jewelry Union’s website.
CBI Governor Valollah Seif told IRNA on Sunday that the bank may also resume gold coin auctions to contain prices.
Seif acknowledged that the gold coin price is a bubble and ascribed it to “peculiar circumstances” surrounding the coin.
Double Rally
The gold coin rally has accompanied the surge in foreign exchange rates that saw the rial sink to record lows against the dollar. The rally started on March 26 and soon the exchange rate surpassed the psychological threshold of 50,000 rials.
The government announced that it has unified the exchange rate for the US dollar at 42,000 rials in response to the crisis.
The government has ensured the public that the US dollar for all purposes, including imports, travel, students and research projects, will be offered by the government at the exchange rate of 42,000 rials.
The decision to launch gold presales was taken in late February when another forex rally swept the markets, which also rocked the gold market. Back then, the government adopted a variety of other tactics to bolster the position of the rial, with reports in February of currency traders being detained, a number of exchange shops being closed down and some bank accounts frozen.
The central bank has also issued one and two-year certificates of deposit based in rials but with a value linked to the euro or dollar, and has been selling gold coins with six-month and one-year maturities at fixed and preferential rates ever since.
But after the currency unification, the banks launched gold coin sales with one-month and three-month maturities.
Last week, the government also officially discarded the US dollar as its currency of choice for financial reporting and opted for the euro.
As per the directive, all ministries and state-owned organizations and companies are obligated to henceforth divulge their official financial statistics, information and data using the European currency.