Economy, Business And Markets

Forex, Gold Rallies Intensify in Tehran Market

Finance Desk
Forex, Gold Rallies Intensify in Tehran Market
Forex, Gold Rallies Intensify in Tehran Market

Tehran foreign exchange and gold markets experienced another bout of rallies on Wednesday, as investors turn to safe-haven investments that have led to a price uptrend not witnessed since 2012.

The usual bull run for the US dollar in late December due to a surge in demand for travel currency has this year been compounded by other factors such as the recent nationwide street protests against an underperforming economy.

In late trade, the rial was quoted at 44,200 to the dollar in the open market to mark another historic low for the Iranian currency, as inquiries by Financial Tribune showed. The shortage of hard currency has been cited by market players as the main cause of the rally that has apparently taken the Central Bank of Iran off guard.

CBI, which is the main market influencer due to its holding of oil forex revenues, had repeatedly sought to assure the markets in the past days that it is in full control and would respond to any volatility with "intervention".

And intervene it did; the CBI started to pump hard currency into the market as of Tuesday, according to IBENA, its affiliated news website.

The bank has reportedly asked exchange shops to sell as much as $100,000 to currency traders by asking for their national ID cards. Each dollar, which has been dubbed "interventional" by moneychangers, has reportedly been sold at 43,440 rials. But even this was not enough to keep the greenback from registering another high on Wednesday.

Some exchange shops preferred to turn off their dollar exchange rate sign on Wednesday, but their signs showed rial at 55,500 per euro, another high-demand currency to mark a record for the European currency as well.

It is not clear whether CBI is ready to continue with its intervention to rein in the rally. When contacted by FT, one of the bank's analysts refused to predict any market trend.

In the gold market, Bahar Azadi gold coin fetched 15.08 million rials ($341), up 1.16 % compared with the previous day to move forward with its surprise rally, according to Tehran Gold and Jewelry Union's website.  

Some 16 CBI auctions that saw the sale of 110,000 coins to rein in the gold rush has not borne fruit. Some local media reports suggested that Wednesday's auctions saw the Azadi gold coin at 15.19 million rials ($343), a rate even higher than that of the market, showing that CBI's interventional measures have even backfired in this market.

A CBI official on Monday had warned ordinary investors not to bet their assets on the gold market and beware of the risks.  

Gold and currency market's gains were a loss for the stock market, as Tehran Exchange's main index dropped 311.74 points or -0.32% on Wednesday. The capital market has been the best-performing one among all the markets in the nine months to Dec. 21, but recent developments could bode ill for a market with high hopes for 2018. 

Add new comment

Read our comment policy before posting your viewpoints