Forex rates paused on Wednesday after consecutive gains since the beginning of trading week impacting the domestic gold market.
The US dollar surged to two-month high and was traded as high as 276,000 rials on Tuesday in Tehran’s open market before retreating on Wednesday.
Dealers quoted the greenback at 273,300 rials, down about 1% or 2,700 rials from the session before.
The American currency has gained more than 5% since Sunday. Observers link the spike in part to the uncertainty around the stalled negotiations to revive Iran’s nuclear deal, known as the Joint Comprehensive Plan of Action (JCPOA).
Driven by some optimism that alas a deal was near, foreign currency rates started declining last December.
A new agreement can and should result in a stronger rial, which has lost much of its value over the past two years, as banking and financial sanctions are lifted and billions of Iranian currency held in foreign banks are released.
However, unconfirmed reports in the local media about the release of some Iranian money blocked overseas explains the decline in the currency market on Wednesday.
Citing unnamed “informed sources”, IRNA, the official government news agency, said “a big portion of Iran’s frozen assets in overseas banks have been released”.
The agency did not elaborate but said the forex assets are reportedly much higher than €470 million in UK debt to Iran unblocked last month.
Other major currencies dropped in tandem with the dollar. The euro fell more than 0.7% to buy 299,590 rials. The UAE dirham lost 1.2% or 900 rials to close at 74,600 rials and the UK pound sterling sold for 359,380 rials, down 0.67% or 2,430 rials on the session before.
Unlike the decrease in the unofficial market, currency prices registered slight gains at exchange bureaus operated by the Central Bank of Iran. The Melli Exchange, affiliated to state-owned Bank Melli Iran, tagged the dollar at 253,330 rials or 0.12% higher on Tuesday.
In the regulated forex market, where currency is traded wholesale, the greenback was tagged at 251,280 rials, down more than 0.1%. The market is a CBI-affiliated spot market operated by a network of banks and certified moneychangers.
Keeping abreast with lower currency rates, prices in the domestic bullion market moved downward, though declines were capped by rising trends in the international markets.
The popular Emami gold coin lost 0.2% to change hands at 126.2 million rials. Half Bahar Azadi coin was down 1.1% to reach 72.5 million rials and one gram of 18-karat gold was worth 12.82 million rials, 0.92% lower from the previous session.
In global markets gold turned positive on Wednesday as risk-off sentiment gripped financial markets amid the possibility of more western sanctions on Russia, although aggressive US rate hike bets kept bullion near a one-week low, Reuters reported.
Spot gold rose 0.3% to $1,928.96 per ounce while US gold futures were 0.3% higher at $1,932.40.
Gold touched its lowest level since March 29 earlier, after the US Federal Reserve Governor Lael Brainard spooked investors about potential aggressive actions by the central bank to control inflation.
