Business And Markets

Iran: Currency, Gold Looking at Big Drops, More to Come

Iran: Currency, Gold Looking at Big Drops, More to Come
Iran: Currency, Gold Looking at Big Drops, More to Come

Major foreign currencies are fast losing value in Tehran amid reported panic selling with the market regulator implying that further decline is on the way.
Extending a long losing streak the dollar opened Wednesday 3.8% lower to hover around 210,000 rials before losing the critical level as sellers flocked to the moneychangers.
The greenback was tagged at 208,000 rials in the open market, closing the session by a whopping 4.8% or 10,000 rials loss in one day.
Prices were even lower at authorized exchange shops affiliated to the Central Bank of Iran. Melli Exchange, affiliated to Bank Melli Iran, tagged the dollar at 205,320 rials, down 3.8% or 7,690 rials compared to Tuesday.
The UAE dirham was the second big loser and bought 58,100 rials down 4.65%. Other currencies experienced smaller losses. The euro lost 1.6% or 4,040 rials to fetch 258,86o rials and the UK pound was worth 299,820 rials down almost 1%
Observers say the free fall at CBI-affiliated exchange shops is  the regulator’s signal for lower rates. Citing statements by the CBI boss Abdolnasser Hemmati late on Tuesday, the Persian-language economic website Eqtesad News said currency prices for forward deals fell following his stance on the forex market.
Referring to the declining pattern in currency prices, Hemmati said the trend is “natural and driven by positive expectations”.
He said, “The possibility of removing banking sanctions and unfreezing billions in forex assets in foreign banks are the main reasons behind the sharp decline in currency prices.” The public statements were construed by dealers and speculators as a sign that the worst is still to come for the mighty dollar and et al.
Hemmati pointed to progress in the Iran nuclear talks in Vienna that has fueled the declining pattern for several weeks. Negotiators are trying to revive the deal, which was blown up  by former US president, Donald Trump, in 2018 who imposed the toughest sanctions in history against Iran’s economy, including its financial ties with the world.    
In related news AP reported Tuesday that indirect talks between Iran and the US nearing an agreement. It also said US officials are playing down the chances of an imminent deal that would bring the two adversaries back into compliance with the landmark 2015 agreement.
With chances of forging a deal increasing, speculators in Iran’s currency market are apparently concerned that the rial may bounce back if the nuclear accord is revived and banking and financial sanctions are lifted, and consequently, billions in Iran’s forex assets locked overseas are released.

Gold at 6-Month Low

Following the sharp decline in forex rates, gold prices in Iran dropped to the lowest in six months, Mohammad Kashtiaray, president of the specialized gold and jewelry commission at Iran Chamber of Guild said, ILNA reported.
The popular Emami gold coin plunged 3% to reach 92.9 million rials -- 2.75 million rials lower compared to Tuesday.
The half Bahar Azadi coin was worth 51 million rials losing 2% or 1 million rials and one gram of 18-karat gold was tagged at 8.95 million rials, losing 5% in one day.   
Besides the influence of the declining currency market, Kashtiaray said, the domestic bullion market is also distressed by lack of demand.  
The precious metal in international markets edged lower Wednesday as a stronger dollar and prospects of higher US interest rates dampened the allure of the safe-haven metal. Spot gold was down 0.1% at $1,776.71 per ounce. US gold futures were steady at $1,775.90, Reuters reported.

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