Major currencies gained against the rial Wednesday with the USD heading upward after breaking past 160,000 rials.
It was traded as high as 162,400 rials at Tehran’s open market up 2,400 rials compared to Tuesday. The greenback has gained more than 4% against the rial since the beginning of business week on Saturday.
The euro hiked about 2.5% to 176,500 rials and the UK pound sterling soared to 199,000 rials, up from 195,000 rials a session earlier.
Rates at the Central Bank of Iran-affiliated moneychangers were slightly lower. The dollar fetched 155,000 rials in these bureaus, 1% higher than the price on Tuesday, according to the Tehran Gold and Jewelry Union website.
Market observers say the spikes in currency prices are largely due to carnage of crude oil prices, which apparently has given rise to renewed demand for foreign currencies.
Pessimism emanating from the near destruction of the international oil market has pushed investors to hoard dollars, according to the Persian-language economic newspaper Donya-e-Eqtesad.
Lower oil prices means less income for the Tehran government. Its coffers have long been shrinking due to problems created by the United States. Key sectors of the Iranian economy, namely oil export, banking and shipping and the petrochemical industry is under tough US restrictions for the past two years.
Complexities in the forex market could hurt CBI leverage to regulate prices. The CBI keeps an eye on currency rates largely through its affiliated moneychangers by balancing the supply and demand.
Market observers say the spikes in currency prices are largely due to carnage of crude oil prices, which apparently has given rise to renewed demand for foreign currencies
A similar pattern is seen in the currency rates in the secondary foreign exchange market, known locally as Nima. Nima is a CBI-affiliated platform where exporters sell their overseas currency and companies buy it for importing non-essential goods, machinery, equipment and raw materials. Nima rates are usually below open market rates.
Currency prices at Nima have been rising at the same pace as open market rates. One dollar currently sells for 147,2941 rials in the secondary market and buys 147,825 rials.
According to Donya-e-Eqtesad, currency hikes in the secondary market are due to the CBI’s new policies tht call for less intervention in the economy and giving more space to exporters.
It appears the CBI is exercising extra caution and has reduced currency offers on Nima due to uncertainties arising from coronavirus spread across the world and below zero oil prices.
Gold Surges
The gold market was also bullish amid soaring currency prices and spike in the price of the precious metal in international markets. Each Emami gold coin was sold for 64.9 million rials Wednesday, 3% higher compared with the previous day. The benchmark Bahar Azadi climbed 2.6% to 63.3 million rials.
Gold prices rose on Wednesday as investors sought safe-havens after an historic slump in oil prices exacerbated fears of a global recession, with most countries remaining locked down due to the infectious coronavirus.
Spot gold in overseas markets was up 0.6% at $1,695.05 per ounce, after touching a near two-week low on Tuesday as a wider market sell-off drove a scramble for cash and prompted investors to sell precious metals to cover losses, Reuters reported.
