Currency rates retreated further from historic highs on Monday as the Central Bank of Iran intensified efforts to intervene in the chaotic market. Gold saw a similar fate.
The US dollar dropped to 309,000 rials in Iran’s open market, down 2.7% or 9,000 rials, compared with Sunday’s close.
After reaching another record high of 322,000 rials last Thursday, the greenback’s rise took a recess Sunday, bucking a rising trend that lasted for nine sessions in a row.
The Emirati dirham, a highly influential currency in Iran’s forex market, lost 1,700 rials or 2%, to reach 86,000 rials on Monday.
Decline in forex rates came amid intervention by the CBI that has started pumping currency in the market to try and put a brake on the historic price rises.
Data compiled by the Persian-language economic website, eghtesadnews, indicate that the central bank injected $310 million in the market in the past four days.
The CBI says supply now far outweighs demand and there is sufficient currency in the forex-starved market.
In a press release, the CBI said it offered $74 million via the regulated forex market on Sunday of which only $1.7 million was sold.
“This is despite the fact that the CBI recently raised the ceiling for purchasing currency by up to half a million dollars a day,” the regulator said.
The regulated market is a network of banks and certified moneychangers working under CBI supervision and dealing in wholesale trade.
The CBI also intervened in the currency market through authorized exchange shops. Melli exchange, affiliated to Bank Melli Iran, quoted the selling price of the dollar at 309,000 rials and bought it for 286,500 rials.
Forex rate volatility has intensified in recent weeks especially after the US announced fresh sanctions against Iran’s financial sector, targeting 18 Iranian banks.
Gold Retreats
Abreast of forex rates as usual, the bullion market dropped sharply on Monday. Emami gold coin fell by 4 million rials, or 2.55%, to reach 15.7 million rials. The half Azadi coin was sold for 83 million rials, down 3 million rials compared with Monday’s session. One gram of 18-karat gold lost 4.5% to fetch 14 million rials.
In international markets, gold climbed on Monday as a softer dollar and optimism over a new US stimulus agreement before next month's presidential election lifted demand for bullion as an inflation hedge. Spot gold was up 0.7% at $1,912.22 per ounce, according to Reuters.
