The greenback started the week at 276,000 rials, posting a weekly growth of 2.8%, the Tehran Gold and Jewelry Union website said. It also shot up in the so-called regulated market and was quoted at 277,180 rials on Thursday, up 1.44% on Wednesday’s clsose.
The regulated market is a spot market operated by a network of banks and certified moneychangers dealing in wholesale currency under the supervision of the Central Bank of Iran.
Eghtesadnews website review of the regulated market shows a decline in supply, which could be seen as one factor behind the growth in rates in the free market.
The euro gained 1.91% in the week reaching 326,440 rials on the last day of trade. The UAE dirham too increased 2.8% in the week reaching 77,410 rials.
Observers say political developments are key in the hugely volatile currency market, especially reports on Iran's nuclear talks with world powers and freeing of the billions of its forex assets blocked in foreign countries due to the US economic sanctions.
The anticipated nuclear agreement can and should translate into a stronger rial as the government would have more access to foreign currency by increasing oil exports and expand foreign trade that now are under sanctions.
Hossein Rahdari, currency market expert, said policymakers need to focus on controlling the steep fluctuations in the forex market rather than reducing prices.
"Policymakers do not have a workable instrument for lowering forex rates. Thus, they need to adopt alternative measures to curb the abrupt jumps in prices," he was quoted as saying by EcoIran.
"Injecting currency into the market at lower prices is a waste of the country's resources" and an exercise in futility, he noted.
Gold Rises
Gold coin prices also increased on the last day of the Iranian week under the influence of higher forex rates and rising international bullion prices.
Emami Gold Coin posted a 2.15% growth compared to Wednesday's close and was traded at 125.45 million rials.
Half Bahar Azadi Gold Coin gained 2.23% to buy 64.5 million rials while the quarter Bahar Azadi Gold Coin was priced at 38.5 million rials, up 2.59% or 100,000 rials on the day before.
Global gold prices slipped on Friday as some investors locked in profits from a six-session long streak of gains, and an uptick in US bond yields cooled safe-haven inflows into bullion driven by inflation worries, Reuters reported.
Spot gold fell 0.7% to $1,849.36 per ounce after hitting a five-month peak on Wednesday.