The downturn soon extended to the domestic bullion market where prices were already distressed by the metal trade in the international market.
The US dollar lost 2.2%, or 5,500 rials, to retreat to 254,500 rials in Tehran's open market on Monday. The greenback had gone as high as 263,000 rials last Wednesday.
Other major currencies dropped on Monday. The UAE dirham was the second biggest loser of the day, dropping 2% to fetch 70,190 rials.
Euro was down 1.1%, or 3,400 rials, to be exchanged for 311,840 rials and the UK pound sterling was worth 357,070 rials, down 1% daily.
The USD was traded almost unchanged in exchange shops affiliated to the Central Bank of Iran, as these moneychangers refused to push up prices in last week’s rally.
Melli Exchange Company, affiliated to Bank Melli Iran, tagged the greenback at 249,820 rials on Monday. Price arbitrage reached 10,000 rials, as CBI's licensed moneychangers stopped pushing up rates to reduce the difference with open market rates.
The greenback declined slightly by 0.1% at the regulated currency market and was worth 250,097 rials. Iran’s regulated forex market is a network of banks and certified moneychangers under the auspices of CBI.
The Persian economic daily Donya-e-Eqtesad ascribes the declining trend in Iran's forex market to lower demand for forex due the Chinese new lunar year that began on Feb. 12.
Pointing to strong economic ties between Iran and China, the newspaper said the Chinese holiday has significantly reduced forex hawala exchange between the merchants of the two countries.
Gold Down
Spurred by the forex downtrend and a decline in gold prices in international markets, the domestic gold market experienced a dull day on Monday.
The Emami gold coin lost the 12 million-rial support level and dropped to 117 million rials, losing 4 million rials, or 3.4%, compared to the previous session.
Half Bahar Azadi coin was down 3% to reach 65 million rials, 2 million rials lower than the previous day. One gram of 18-karat gold fetched 11.34 million rials, 180,000 rials, or 1.6% lower compared to Sunday, according to Tehran Gold and Jewelry Union’s website.
Gold eased on Monday after US Treasury yields jumped to their highest in nearly 11 months in the previous session, with platinum scaling a six-year peak on expectations of a supply shortfall.
Spot gold fell 0.1% to $1,821.84 per ounce by 0041 GMT. The US gold futures slipped 0.1% to $1,822.30.