Foreign exchange rates in the unofficial market extended weeklong gains against the rial hitting fresh highs on Thursday.
The dollar was traded at as high as 308,000 rials posting more than 3% rise from the day before. Triggered by inflation expectations, the American currency has gained more than 8% in one week.
The Central Bank of Iran says the new market volatility is driven more by excitement and inflation expectations rather than fundamental market factors, such as insufficient supply.
The inflation expectations are seen as side-effects of the government plan to overhaul the country’s subsidy payment by eliminating the subsidized currency ($1=42,000 rials) for basic imports.
The Governor of Central Bank of Iran Ali Salehabadi assured the people that the bank “has unprecedented currency reserves at its disposal”.
Earlier in the week, he argued that ending the currency subsidies will give rise to the forex reserves that would improve the currency market in the long-term.
Observers blame the jump in forex rates on the uncertain fate of talks between Tehran and world powers to restore Iran’s 2015 nuclear deal.
On Thursday, the euro was sold at 323,400 rials, 2.3% rise on the previous session. The UK pound sterling gained 1.9% to buy 379,900 rials while the UAE dirham was up 2.4% at 83,700 rials.
At official exchange shops run the CBI the greenback was almost unchanged at 257,270 rials, up 0.06% on Wednesday.
Currencies slipped in the wholesale currency market. The American currency was traded at 255,900 rials, down 0.1% or 180 rials.
The domestic bullion market was of the ascending order throughout last week in light of the sharp rise in currency rates and despite the downturn in international gold prices.
The Emami gold coin gained close to 3.2% or 4.5 million rials to cross above the critical 140 million rials and finish at 141.2 million rials.
Half Bahar Azadi coin was worth 78.95 million rials, gaining 3.1% or 2.5 million rials and one gram of 18-karat gold changed hands at 13.95 million rails.
In international markets, the yellow metal and other precious metals dropped on Thursday. According to Reuters, spot gold fell 1.6% to $1,823.14 per ounce and US gold futures settled down 1.6% at $1,824.60.
