Currency rates dropped in Tehran’s unofficial markets after months of record highs. The US dollar was quoted at 425,000 rials on Sunday in the open market, down 3.19% from the previous day's close.
The euro fell 3.21% and was quoted at 452,900 rials and the GBP ended the day near 511,400 rials, down 3.43% from Saturday’s close.
The UAE dirham was the only currency in positive territory and was sold at 128,100 rials. Currency rates jumped to historic highs in the past several months with the embattled rial in freefall. Hit by the rapidly deteriorating economic conditions, people sought safe havens to protect what was left of their hard-earned savings.
The rial’s recovery comes amid cautious optimism and after new power was delegated to the central bank and the opening of a new trade center for currency and gold known as the Iran Center of Exchange (ICE).
The ‘Council for Coordination of the 3 Branches of Government’ last month gave new authority to the Central Bank of Iran to enable it to prop up the rial and stabilize the chaotic forex market.
Heads of the three branches (executive, legislature, and judiciary) stressed the need and significance of working in concord to help restore calm to the currency market struggling with skyrocketing rates unseen in the history of the country. The CBI last week unveiled the ICE, apparently in the latest bid to control forex and gold prices.
Mohammad Reza Farzin, the CBI governor, said, "Rates in this center will be the reference rates based on forex/gold demand and supply as well as key economic indicators." The greenback was quoted at about 400,000 rials on Sunday at ICE.
Recent political developments seem to have impacted the market considerably. Iran and Saudi Arabia on Friday agreed to restore diplomatic relations after seven years. The two countries severed ties in 2016 after a hardline group stormed the Saudi Embassy in Tehran following the kingdom’s execution of a prominent Shia cleric.
They have also been at odds over a host of regional issues, including the war in Yemen where they support opposing sides.
Market analysts say that the deal’s impact on the currency market is mostly because of the two countries' strategic role in the region and their impact on other countries in the region.
The visit of the head of the International Atomic Energy Agency Rafael Grossi to Iran last week and reports about the release of Iranian assets in some countries have also affected the forex market in the past few days.
