Foreign exchange rates plunged and the rial strengthened on Saturday amid new reports about progress in negotiations to revive the Iran nuclear deal.
The dollar lost more than 3.6% against the rial and was quoted at 265,000 rials in Tehran’s free market, almost 10,000 rials lower compared with the session before.
Iran’s currency market is highly sensitive to political developments, particularly the fate of the landmark 2015 nuclear deal which the US, under Donald Trump, abandoned in 2018 and imposed tough economic sanctions on Tehran to force it agree to a new agreement on Washington’s terms.
The sharp decline in forex rates comes after reports on Saturday that the United States has restored sanctions waiver related to Iran’s nuclear activity, a positive sign seen by market observers as the critical nuclear talks is entering the final stretch.
Experts say if there is a deal, the rial, which has lost much of its value over the past year, would rebound after banking and financial sanctions are lifted as envisioned in the original agreement between Iran and the five permanent members of the UN Security Council (the US, France, UK, China and Russia) plus Germany.
Progress in the talks, due to restart in the coming week in Vienna, was confirmed by Foreign Minister Hossein Amirabdollahian.
He said Tehran wants a verifiable removal of all sanctions before reversing its nuclear progress along with guarantees that no future US government would dismiss – as happened during the Trump era.
The minister on Saturday said “some agreements have been reached” on guarantees after the removal of sanctions, IRNA reported.
Other major currencies also posted big losses on Saturday. The euro was down more than 1% % to buy 307,785 rials. The UK pound sterling was tagged at 363,840 rials, less 2.7% on Thursday. The UAE dirham lost more than 3% or 2,200 rials and was quoted at 72,800 rials, Eghtesad News website reported.
Currency also fell in the official exchange shops affiliated to the Central Bank of Iran. The Melli Exchange, owned by Bank Melli Iran, tagged the greenback at 246,860 rials, down 2.5% compared to the previous session.
In the regulated market, where currency is traded wholesale, the dollar was quoted at 248,100 rials, indicating a 1.26% daily decline.
Gold Falls Sharply
The domestic gold market too saw big losses after currency prices took a hit. The popular Emami Gold coin was worth 118.85 million rials, down 2.95% or 3.5 million rials in one day.
Half Bahar Azadi coin closed nearly 1.5% lower to reach 66.7 million rials and one gram of 18-karat gold was worth 11.78 million rials, 3.27% lower on Thursday.
In international markets gold edged higher in choppy trade on Friday as growing inflation worries helped cushion pressure from a firmer dollar and higher US Treasury yields after a surprisingly upbeat US jobs data, newswires said.
Spot gold was up 0.1% at $1,805.95 per ounce after hitting a one-week high earlier in the session. Bullion is up 0.8% so far this week. US gold futures settled 0.2% higher at $1,807.80.
