Foreign exchange rates declined on Saturday impacted by prospect of a stronger rial in light of optimism that Iran’s financial and banking ties with the outside world were set to improve.
The dollar fluctuated between 259,000-261,000 rials for several days before pausing to lose 5,000 rials. It was worth 254,500 rials on Saturday, losing 1.5% in one day, a big daily loss compared to the 1.1% decline over the past week.
Other major currencies, namely euro, UK pound and UAE dirham also fell. The European currency retreated to 315,000 rials down 0.95% daily, the pound fetched 344,300 rials losing 1.7% and the dirham lost 1.4% to trade at 69,600 rials.
A caveat by the governor of the Central Bank of Iran to currency investors plus government efforts to get a final approval for two remaining bills demanded by FATF, the international money-laundering watchdog, are seen as the two main factors that should help restore calm to the forever chaotic currency market.
In a post on his social media account on Friday, the CBI boss Abdolnasser Hemmati said the bank was closely monitoring trends in the forex market.
In a rather sarcastic manner he addressed currency investors. “Resistance from those holding foreign currency against decline in prices is understandable. But fundamental factors determine the market trend".
He referred to importers' hesitation in recent days to buy currency from the secondary forex market, known as Nima, as proof for his claim.
Nima is a trade platform where exporters sell their overseas proceeds and companies buy to pay for their imports.
The forex market possibly also took influence from the news that the Expediency Council, the top legislative body, will again discuss the remaining bills mandated by the Financial Action Task Force.
The EC on Friday confirmed that the Leader of Islamic Revolution Ayatollah Seyyed Ali Khamenei has approved a government request to extend the deadline for discussions on Palermo (convention against transnational organized crime) and terrorist financing conventions (CFT) bills.
While the EC emphasized that the extension would be only for discussing the bills and not necessarily approving them, there is cautious optimism that at least some of obstacles to Iran's banking and financial system would be removed if the powerful council votes in favor of the bills.
Gold Stumbles
Gold extended last week’s losses when the market opened on Saturday driven by the decline in forex rates.
The Emami gold coin retreated to 117.5 million rials, down 1.5 million rials or 1.3% compared to the earlier session.
Half Bahar Azadi gold coin lost 500,000 rials to reach 61.3 million rials and one gram of 18-karat gold was worth 11.31 million rials, down 0.5%, according to Tehran Gold and Jewelry Union website.
Despite higher prices in international markets, gold posted a bigger loss than the dollar last week. The precious metal lost 4.4% in Tehran.
Gold slipped in world markets on Friday after three days of gains as the dollar's rebound offset support from hopes of a US fiscal stimulus package, Reuters reported.
Spot gold was down 0.3% at $1,880.11 per ounce on the day. US gold futures settled down 0.1% at $1,888.90. It was still up about 2.2% for the week and on track for a third straight weekly gain.
