Economy, Business And Markets

Greenback Advances to 5-Month High

Business & Markets Desk
Greenback Advances to 5-Month High
Greenback Advances to 5-Month High

The rial fell to record lows against major currencies on Saturday as investors fled Iranian equities, which dropped to four-week lows.

The US dollar advanced 0.93% to a five-month high of 33,560 rials by 1126 GMT. The US currency has soured 5.6% in the past three weeks. The greenback has had its best month since November when it rose over 7% versus the rial.

Other currency majors also rose on Saturday. The euro rose 0.41% to 36,700 rials while the Emirati dirham and Turkish lira—both gauges for Iranian trade—gained 0.66% and 0.57% to 9,130 rials and 12,250 rials, respectively.

Meanwhile, Tehran Stock Exchange's main index fell to its lowest since July 6, erasing all its gains on the runup to the Iran nuclear deal. The TEDPIX retreated 0.68% to 66,000.90 points as major banks and industry heavyweights like automaker Iran Khodro and shipping company IRISL pulled down the index.

Shares on the Iran Fara Bourse (over-the-counter market) also dropped with petrochemical producers and lenders leading the losses. The IFX closed 0.66% lower for the day at 772.35 points, also lowest since July 6.

The added haven demand has surprised many who expected the reverse to happen following Iran's agreement with the United Nations Security Council to limit Tehran's nuclear works in exchange for lifting economic sanctions against the country.

But the long process until the accord's full implementation and the manifestation of its effects on company earnings, coupled with constant political threats to undermine the agreement, have driven off bullish investors.

Furthermore, traders say the market's risk far outweighs its expected returns, as other economic condition,s especially access to financing and domestic demand, remain depressed.

Good Times for Gold

Benchmark bullion coin Azadi rose 0.75% to 8,780,000 rials by 1126 GMT on Ferdowsi Street—the center of foreign exchange trading in Tehran. Azadi's gains were helped by its overnight gains in international markets on the prospects of an imminent rate hike by the US Federal Reserve.

Gold rose on Friday as investors assessed US non-farm payrolls data that may indicate the federal reserve will delay an immediate interest rate hike but was still on course for a weekly fall, Reuters reported.

Nonfarm payrolls increased 215,000 last month as a pickup in construction and manufacturing employment offset further declines in the mining sector, the US Labor Department said on Friday. The unemployment rate held at a seven-year low of 5.3%.

Spot gold, which hit a session low of $1,082.76 an ounce immediately after the US jobs report, managed to rebound 0.5% to $1,094.54 by 1831 GMT on Friday. It had fallen to $1,077 on July 24, its weakest since February 2010.