Foreign exchange rates extended gains against the national currency on Wednesday with the dollar getting closer to the critical 280,000-rial level.
Currencies were traded moderately in the middle of the day before advancing sharply later. The dollar was traded around 278,000 rials on Wednesday morning but in late trade it was quoted at 279,700 rials in Tehran’s open market.
Similarly, the euro was almost unchanged and was tagged at 320,200 rials, the UK pound sterling gained more than 1.2% or 4,630 rials to buy 386,580 rials and the UAE dirham was traded at 76,190 rials, up 1.2% or 900 rials compared to Tuesday, according to data seen on Tehran Gold and Jewelry Union website.
Official exchange bureaus, affiliated to the Central Bank of Iran, tagged the greenback at 266,900 rials, unchanged compared to the day earlier.
Forex rates were also higher in the regulated market where currency is are traded wholesale. The dollar was quoted at 268,320 rials up more than 0.7% in one day.
The regulated forex market is a network of banks and certified moneychangers working under CBI supervision.
Observers point to multiple reasons behind the recent volatility in the currency market, namely mounting uncertainty about the outcome of diplomatic efforts to revive Iran’s 2015 nuclear deal, known as Joint Comprehensive Plan of Action (JCPOA).
The deal can and should translate into a stronger rial as the government would have improved access to foreign currency by increasing oil exports and improving foreign trade that now are under US sanctions.
The ongoing sociopolitical turmoil in Afghanistan is another key factor pushing up forex rates in Tehran following rising demand in Afghanistan's northwestern city of Herat, bordering Iran.
Moreover, market observers refer to the diminishing role of the CBI and a “power vacuum” in the currency market as the central bank awaits a new governor under the new president, Ebrahim Raisi.
Gold prices rose slightly under the influence of the nervous currency market but the growth was restrained due to declining trend in international bullion markets.
The Emami gold coin gained 0.25% or 300,000 rials to change hands at 121.6 million rials. Half Bahar Azadi coin declined 0.3% to reach 62.8 million rials and one gram of 18-karat gold bought 11.78 million rials up 0.23%.
Gold prices fell Wednesday in international markets, weighed by an uptick in the dollar and buoyant risk appetite, as investors awaited the US Federal Reserve Chairman Jerome Powell’s speech this week for guidance on the central bank’s taper plans, Reuters reported.
Spot gold was down 0.5% at $1,793.50 per ounce by 0704 GMT, while US gold futures fell 0.7% to $1,795.90.
