The rial surged versus all foreign currencies and equities rose in Tehran on Saturday, as optimism that Iran and the six world powers (P5+1) would strike an accord ending the 12-year nuclear standoff curbed hedging bets.
The US dollar dipped against the rial on Saturday, despite dollar-buying momentum lifting the greenback to a fresh 12-year high against the euro in international currency trade on Friday.
The rail rose versus all major currencies and gold in Ferdowsi Street – the hub of foreign exchange trading in Tehran, while stocks had their best day since Oct. 29, rising 0.84 percent, with worst sanctions hit industries pushing up the Tehran stock exchange's main index to a three-week high of 64,610.30 points.
The dollar had its worst day since Nov. 24, 2013, falling 2.65 percent to a fresh four-month low of 32,400 rials by 12:35 GMT on Saturday.
The euro also took further beating in Tehran, dragged down by the dollar’s decline and its dip in the global arena due to the European Central Bank’s bond buying program. It sank 2.8 percent to 34,700 rials, breaking below the 35,000 rial mark to a three-year trough.
Sterling was the hardest hit, plunging nearly three percent to 49,270 rials by 12:35 GMT in Ferdowsi Street. The British currency dropped below the key 50,000 rial level to a 12-month low on Saturday, after retreating to its lowest since 2010 versus the dollar in Forex markets.
“This is a big setback for sterling,” said one currency trader to the Financial Tribune, “the [50,000 rial] level was a huge psychological support.”
Gold coins didn’t fare any better versus the Iranian unit of value. Benchmark bullion coin, the Azadi, retreated 2.64 percent to 9,100,000 rials, lowest in five months.
Azadi’s sister coin, Emami, was even worse off on Saturday. The precious coin plunged 3.18 percent to 9,130,000 rials.
Many bureau de change owners have taken massive losses in the past few days, as they had to manage their way through the selloff. “Anything I’ve bought in February, I have had to sell at a loss,” said a bureau de change owner. “We’re taking huge hits over these nuclear talks enthusiasm. Even if there was a deal tomorrow, it would take a year for its effects to materialize.”
What was pain to foreign currencies was pleasure to equities. Optimism of a deal, between Iran and world powers, coming out of Switzerland raised bullish bets in Tehran’s stock markets.
Industries most affected by sanctions were the main gainers of the optimism.
Lenders Saderat, Mellat and Pasargad along with Persian Gulf Petrochemical Industries Co. (PGPIC), Tamin Petroleum & Petrochemical Investment Co. (TAPPICO), and the Islamic Republic of Iran Shipping Lines (IRISL) were the drivers of Saturday’s rise in the TSE. Banking and petrochemical firms were also the winners in Iran’s over the counter market, Iran Farabourse, driving the IFX index up 0.64 percent to 723.1 point.
