It ended the day 2% or 5,000 rials higher than Monday at 220,000 rials in Tehran's open market. With the gains the currency bucked a declining trend that lasted for five consecutive sessions pulling down forex rates to five-month lows on Monday.
In line with the spike in dollar price, the UAE dirham was 1.8% higher and sold for 60,800 rials. However, other major currencies, namely the euro and pound sterling reversed course and closed lower compared to the day before.
The single European currency was worth 254,560 rials down1.95% or 4,960 rials while the UK pound sterling closed 2.2% lower to fetch 285,390 rials, according to eghtesadnews website.
The dollar's gain forced the official exchange shops affiliated to the Central Bank of Iran to push up prices. It was quoted at 217,880 rials at Melli Exchange affiliated to the state-owned Bank Melli Iran.
The greenback has lost close 13% in a week spurred by cautious optimism that the national currency would gain in the coming weeks.
While government officials say that the decline in forex rates was a “natural response” to political developments, namely change of guard in the US, which could possibly result in the easing of tough economic sanctions, there is concern that the CBI has a hand in influencing currency rates.
Skeptics recall the sharp decline prices soon after President Hassan Rouhani's said last week said forex rates would move downwards in the next fiscal year that starts in March.
Rejecting intervention in determining forex rates, Ali Rabi'ie the government spokesperson, on Tuesday blamed the US economic sanctions as the main culprit creating chaos in the currency market. "Forex rates will naturally decline when sanctions are removed.”
Last week Rouhani said his government is determined to reduce forex rates reiterating that the "current rates are not real."
He recalled concerted efforts by his government to unfreeze billions in forex assets overseas. "The dollar should plunge to 150,000-160,000 rials if our overseas resources are unlocked.”
The American currency surged to a record high of 320,000 rials in the run-up to US presidential vote in late October as dealers and speculators betted on the victory of the “disgraced and controversial” Republican Donald Trump. However, that was not to be after the Democrat Joe Biden was declared winner of the highly contested Nov. 3 election.
Gold Up
The domestic bullion market was upbeat Tuesday influenced by forex market trends in tandem with precious metal gains in international market.
Emami gold coin clawed back to 100 million rials gaining 3 million rials or 3% compared to the previous session. Half Bahar Azadi coin was up 1 million rials to reach 54.5 million rials, 1.83% higher than the previous session. One gram of 18-karat gold fetched 9.62 million rials and climbed 4.6% compared to Monday.
Gold in the international markets edged higher from the last session's 1-1/2 month low as the dollar eased off highs ahead of US treasury secretary nominee Janet Yellen's speech later in the day, when she was expected to raise the case for more fiscal spending, according to Reuters.
Spot gold rose 0.3% to $1,842.46 per ounce, recovering from its lowest since Dec. 2 at $1,809.90 hit on Monday. US gold futures gained 0.7% to $1,842.70.