Currency rates fell on Saturday as speculators tied forex prices to political developments and there seemed to be more sellers than buyers in Iran’s open market.
The market was already on the downside Wednesday following guarded optimism about the success of reviving Iran’s nuclear deal that has become a key issue for almost all manufactures dependent on imports, suppliers and consumers.
On the opening day of the Iranian week, the US dollar dived below the critical 310,000-rial level and was quoted at 306,000 rials in Tehran’s open market.
Compared with the prices seen a session before, the greenback was 5,400 rials lower or more than 1.7%.
It appears that the chaotic currency market is assigning added credence to the complex nuclear negotiations, now stalled. Observers say the likelihood of the much-awaited deal between Tehran and the world powers has triggered a selloff in currency market.
Talks to revive the nuclear agreement, known as the Joint Comprehensive Plan of Action, or the JCPOA, were held last week.
Negotiations have been underway in Vienna, Austria, for over a year to work out how both sides can resume compliance. The talks last stalled in March and the European Union made a new proposal last week.
The fate of the difficult talks has impacted asset markets, particularly the currency market. Observers say the national currency will rebound if the banking and financial sanctions are removed as envisioned in the original 2015 deal, which was abandoned by the United States under the controversial president Donald Trump. He is now facing a long list of criminal investigations and could land up in prison if found guilty.
Revival of the JCPOA means billions in Iranian assets trapped in overseas banks would be unlocked and help boost the struggling rial.
Other major currencies also stumbled on Saturday. The euro lost 1.2% to buy 314,500 rials, almost 4,000 rials lower on the session before. The UAE dirham was the biggest loser as it shed more than 3.4% to buy 83,300 rials and GBP was worth 371,550 rials, down 6,500 rials or 1.9% from Thursday.
Unlike the decline in the unofficial market, forex rates moved upwards in the official market operated by CBI-affiliated exchange shops. The dollar was quoted at 280,510 rials by Melli Exchange – up 0.19%.
The greenback was lower in the wholesale market, known as the regulated forex market and was traded at 279,120 rials, according to Iran Currency Exchange website.
As expected, prices in the domestic gold market dropped in tandem with currency rates. The Emami gold coin lost more than 1.9% % or 2.8 million rials on Saturday and retreated to 145.31 million rials. Half-Bahar Azadi coin lost 1.25% or one million rials to change hands at 80.5 million rials and one gram of 18-karat gold was worth 13.3 million rials, down 3.2% from the earlier session.
In international markets spot gold rose 0.5% to $1,798.86 per ounce on Friday and was headed for a more than 1% weekly rise. US gold futures also settled up 0.5% at $1,815.5.
