Foreign exchange rates were choppy Monday rising slightly in the early hours of trade before making a sharp retreat.
The US dollar closed at 241,500 rials in Tehran's free market down 1.4% compared to the previous session. After posting a 1.3% decline a day earlier, the greenback was quoted higher early on Monday, trading as high as 246,000 rials.
Other major currencies dropped on Monday. The euro was down 1% to fetch 290,000 rials and the UK pound sterling declined 0.93% to buy 341,840 rials. The biggest daily decline was in the UAE dirham. It sold for 64,400 rials 1.8% lower compared to Sunday.
Decline in exchange rates apparently is due to political positivity about talks making progress in Vienna between Iran and the world powers to revive the landmark nuclear deal.
The talks started in early April to bring back Tehran and Washington into full compliance with the accord.
Prospect of the United States returning to the Iran nuclear deal has reportedly weakened sentiments in the forex market perturbing avaricious currency dealers who expect a weaker dollar if and when the US under President Joe Biden rejoins the nuclear agreement and ends the economic blockade imposed by his predecessor.
Lower forex rates at selected exchange bureaus led to queues in the hope for making a profit from the price difference that went as high as 5,000 rials.
Melli Exchange, affiliated to Bank Melli Iran quoted the dollar at 238,470 rials pushing up the rate slightly by 0.15% seemingly to reduce price arbitrage with open market rates.
As per law, Iranians can buy not more than $2,200 (or equivalent) in one year from authorized moneychangers by showing their ID cards.
The greenback also lost 0.66% or 1,550 rials in the regulated forex market and was tagged at 234,470 rials. The market is operated by exchange bureaus dealing only in wholesale currency trade.
Gold Down
Influenced by the decline in forex rates, gold market defied the upbeat mode in global markets and dropped Monday.
The Emami gold coin lost 1.8% to 102.4 million rials losing 1.8 million rials on Monday compared to the earlier session. Half Bahar Azadi gold lost 2.5% and was worth 60 million rials, 1.5 million rials lower compared to the session earlier.
Fall in gold prices is also linked to the a general decline in demand for the precious metal as the domestic gold market is closed since April 10 due to Covid-19 lockdown.
In international markets gold rose on Monday, hovering near a seven-week peak seen in the previous session, as a softer dollar and a retreat in US Treasury yields lifted demand for the safe-haven metal, Reuters reported.
Spot gold was up 0.3% at $1,781.75 per ounce after hitting its highest since Feb.25 at $1,783.55 on Friday. The US gold futures edged 0.2% higher to $1,783 per ounce.
