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Surge in Currencies, Gold

Surge in Currencies, GoldSurge in Currencies, Gold

The dollar soared to an eight month-high versus the Iranian currency on Wednesday, extending its four-day rally.

Meanwhile, the Azadi bullion coin jumped to a two-month high on Wednesday, capping the biggest three-day gain in eight months, despite gold slipping in the international market.

The rial has been falling against all major currencies this week, putting it on track for its worst week in eight months.

 Soaring Dollar

The greenback surged by as much as 1.01 percent to 32,940 rials versus the rial by 12:00 GMT, although it was retreating from its strongest in five years against a basket of major currencies.

The dollar finally broke above the 9,290,000 rials mark, a resistance level it had tested twice in the past two months. The greenback is poised for a two percent jump this week.

This is the fourth straight month that the dollar is advancing against the rial. The US currency is up by 14.5 percent versus the rial this year, breaking most if not all hopes of unifying the foreign exchange rate regime for the central bank.

 Surging Euro

The euro extended its gains against the rial on Wednesday. The European currency surged by 1.22 percent to 41,350 rials helped by its rally in the international market, following a rebound in German business sentiment. The euro has gone up by 2.1 percent in the past three days according to data compiled by the Financial Tribune.

The British pound also rose nearly one percent and traded at 51,620 rials, by 13:00 GMT on Wednesday. Sterling had broken above the 51,000 rials mark in the previous session.

The currencies of two of Iran’s neighboring countries stood to gain the most. The Turkish lira gained just shy of two percent to 15,070 rial, while the Iraqi dinar soared by 2.89 percent reaching 28,500 rials on Wednesday.

 Rising Gold

The Azadi bullion coin surged as safe haven demand increased in Tehran this week.

The Azadi rose by over 0.8 percent for the third successive day. Azadi’s price hit 9,355,000 rials on Wednesday.

“We can see coin, [the Azadi], reaching 10,000,000-rial level with the current trend,” said a Tehran- based trader to the Financial Tribune, “demand is going to rise by year-end (end of Iran’s calendar year on March 20].”

The Quarter Azadi advanced the most between gold coin denominations, jumping by 1.13 percent in the day and reaching 2,690,000 rials.

All the while, gold slipped from $1,200 an ounce as equities rose on optimism over the US economy, while investors nervously awaited cues from the greenback and a Swiss referendum on central bank bullion reserves.

Gold has been trading in a tight range, testing the $1,200 an ounce level and hovering just below its 50-day moving average this week. Bullion for immediate delivery slipped 0.28 percent at $1,197.56 an ounce at 14:00 GMT on Wednesday, while US gold futures for December delivery were down $2.50 an ounce at $1,194.60, but gold’s moves were softened as physical demand lent support.

The precious metal is holding below a three-week high of $1,207.73 reached on Friday.

Investors were awaiting new data on jobs, consumer sentiment and durable goods orders for clues on the outlook for US monetary policy, Reuters reported.

Traders are also closely monitoring news about the upcoming referendum in Switzerland over a proposal aimed at preventing the Swiss National Bank from offloading its gold reserves. A yes vote would force the SNB to boost its gold reserves from 7.8 percent of its assets last month to 20 percent.

 

Financialtribune.com