Foreign exchange rates declined in Tehran’s free market on Monday amid uncertainty about the nuclear talks in Vienna and emergence of the fifth wave of Covid-19 infections across the country.
The dollar fell below 250,000-rial level losing more than 0.85% and closed at 249,700 rials down 2,100 rials compared to Sunday's close. Bank-affiliated exchange bureaus demanded 244,540 rials for the greenback -- 0.13% lower than the previous day.
The dollar’s rise started in late May and has jumped 8% in four weeks but the trend slowed down on Saturday.
The euro lost more than 4,900 rials or 1.38% to reach 296,560 rials and the UK pound was worth 350,750 rials or 0.43% lower compared to the earlier session. The UAE dirham was quoted at 68,080 rials down 0.5%.
Observers say the outcome of negotiations in the Austrian capital to revive the landmark 2015 nuclear agreement is and will be one key factor influencing the forex market in the coming months.
The Central Bank of Iran said on Sunday that the currency market volatility is short-lived. As in the past, it said the current volatility is due “change in expectations” vis-à-vis international developments that potentially impact the economy.
Given the economic implications of the landmark nuclear deal and its impact on the rial, the currency market has responded to updates from the extended negotiations about salvaging the deal and lifting of all the sanctions, which is a key Iranian demand.
“Sensitivity to reports about [restoring] the 2015 deal notwithstanding, there [also] are fundamental economic factors that determine trends in the currency market,” the CBI said in a rare analysis at the weekend.
Influenced by the decline in forex rates the domestic gold market also reported fall in prices. The popular Emami gold coin was worth 105.8 million rials, down 1.56% compared to Sunday.
Half Bahar Azadi gold coin fell more than 2.66% to close at 56.5 million rials and the Quarter Bahar Azadi gold coin lost 1.36% or 500,000 rials to finish the day at 37 million rials.
Demand for gold is expected to decline in the coming weeks as emergence of the fifth wave of Covid is likely to result in lockdowns and business closures in Tehran and other high-risk cities.
In international markets, gold prices inched higher on Monday as a softer dollar and lower bond yields amid a mixed bag of US labor data allayed investor concerns about a faster policy tightening, helping the yellow metal rise again towards the $1,800 level.
According to Reuters, spot gold was up 0.3% at $1,791.2 per ounce, after hitting its highest since June 18 at $1,794.86 on Friday.
