Currency rates soared sharply in Tehran on Monday amid warnings that the prices are driven more by speculators and less by fundamental factors.
Following a period of steep volatilities, the forex market was relatively stable for two weeks before ascending from last Saturday.
The US dollar briefly touched the psychological level of 160,000 rials for the day before retreating to 158,500 rials at 15:00 p.m. local time in Tehran’s open market -- up more than 3% compared to Saturday’s close.
One euro was worth 175,000 rials and the pound sterling sold for 198,000 rials.
In response to the rising trend in forex rates, Governor of the Central Bank of Iran Abdolnasser Hemmati said there is “no real and significant” demand for currency in the market, blaming middlemen, currency dealers and speculators instead.
“There is no real and significant demand for currency in the last days of the [Persian] year and outbreak of coronavirus,” he wrote in an Instagram post Monday.
This is despite the fact that as the calendar year comes to a close people rush to the currency market their overseas travel during the two-week Nowruz (New Year) holiday season that starts on March 20.
However, there is no such demand in the market this year as most Iranians have canceled their overseas travel due to the spreading coronavirus.
With regard to the currency needs for importing firms, Hemmati said importers buy their currency from the secondary forex market where rates have been declining given the increase in supply by exporters in recent weeks.
The secondary forex market, known locally as Nima, is a venue through which exporters repatriate their overseas earnings at rates lower than open market.
Following the steep rise in currency prices at Tehran’s open market, moneychangers affiliated to the CBI adopted a smart pricing tactic by keeping the buying prices unchanged but increasing sale prices to fill the gap with open market rates and discourage arbitrage.
Data posted on Tehran Gold and Jewelry Union website shows that bank-based exchange bureaus quoted 156,460 rials for a dollar on Monday, up more than 5.5% compared to the close of the previous session.
They bought one greenback for148, 000 rials, apparently in a bid to gradually draw sale price(s) closer to the buying price and try to “regulate the rates”.
The CBI says it monitors currency rates largely through its affiliated moneychangers, including bank-affiliated shops.
