The dollar closed at 279,900 rials, gaining 0.61% or 1,700 rials compared to the session before. It has gained more than 1.4% in the two sessions.
The American currency retreated to 276,000 rials last week following reports about the resumption later this month of international talks to restore the Iran nuclear deal.
The currency market in Iran is sensitive to political developments, particularly the fate of the 2015 nuclear deal which the US under Donald Trump abandoned in 2018 and imposed tough new economic sanctions to force Tehran to renegotiate the landmark agreement endorsed by the United Nations.
Success of the talks means a stronger rial given the perception that that will lead to increase in forex revenues and unfreezing of billions of dollars blocked overseas due to the US penalties.
The European currncy gained 0.6% or 2,170 rials to settle at 324,050 rials on Sunday. The UK pound sterling and the UAE dirham were up 0.65% buying 379,300 rials and 76,260 rials, respectively, the Gold and Jewelry Union website said.
Unlike the free market, the dollar dipped 0.4% and was worth 263,200 rials in official exchange shops controlled by the Central Bank of Iran.
In the wholesale currency market, known as regulated forex marker, the greenback rose 0.95% or 2,570 rials to buy 270,210 rials.
The regulated forex market is a spot market operated by a network of banks and certified moneychangers dealing in wholesale currency. It too is under CBI control.
As is often the case, the domestic gold market was affected by the rise in currency market on Sunday. The popular Emami gold coin crossed the critical 120 million rials to trade at 121.5 million rials, rising 1.4% or 1.7 million rials, compared with the session before.
The Half Bahar Azadi coin fetched 62 million rials up 0.8% and one gram of 18-karat gold was sold at 12.01 million rials, indicating 0.35% increase on Saturday.