Economy, Business And Markets
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Rial Regains Lost Ground

Rial Regains Lost Ground
Rial Regains Lost Ground

The dollar fell against the rial on Wednesday registering the fourth consecutive day of losses.

The US dollar, the euro and the British pound sterling fell as the equity market slipped to a 15-month low in Tehran.

The rial which had lost over seven percent against most currencies in November, has recouped some of its losses at the year end. On Monday, when asked about the recent depreciation of the rial, the governor of the Central Bank of Iran said the recent “volatility” in the market was due to seasonal reasons [approaching the end of the Gregorian year] and that pressure on the rial was likely to subside through January.

“The central bank is closely monitoring the foreign exchange market and it will control volatility if deemed necessary,” said Valiollah Seif.

The euro fell the most among major currencies. The European currency fell 1.59 percent and was exchanged at 42,700 rials by 12:07 GMT on Wednesday, in Ferdowsi Street – centre of currency trade in Tehran.

Sterling dropped just shy of one percent to 54,600 rials. The British currency lost 530 rials by 12:07 GMT on Wednesday.

The greenback which is retreating from an 18-month high versus the rial slid 0.49 percent to 34,980 rials, breaking below the 35,000 rials mark.

Tehran Stock Exchange’s main index TEDPIX, broke below the 68,000 mark and slipped 0.41 percent to a record low of 68,970.00, based on TSE data.

The Tehran Stock Exchange’s Index lost 20.8 percent in 2014, set for the first yearly decline since 2008, as petrochemical companies and lenders plunged.

Analysts cite the ongoing uncertainty over the fate of Iran’s sanctions, the widening budget deficit which fuels speculation that the government will have to monetize the deficit and the plunge in crude oil prices as the main reasons for the downtrend that is currently choking stock performance.

Oil prices are at a 5-1/2 year low, pressured by weakening demand and a supply glut prompted by the US shale boom and OPEC’s refusal to cut output. Crude oil is heading for its worst year since 2008.

On Wednesday, prices came under further pressure by a survey showing that China’s factory sector shrank for the first time in seven months in December - a bearish indication on the strength of oil demand in the world’s second-largest consumer.

The Brent oil benchmark plunged nearly three percent to $56.20 per barrel by 12:28 GMT on Wednesday. The West Texas Intermediate fell 1.88 percent to $53.10 per barrel, according to Bloomberg generic pricing.

Global benchmark Brent crude has fallen 49.5 percent in 2014 as demand growth slowed, the United States expanded output and OPEC, dropping its strategy of trimming supply to keep oil around $100 a barrel, chose instead to defend market share.

Financialtribune.com