Governor of the Central Bank of Iran Valiollah Seif assured markets on Monday that the big rally in foreign exchange rates is temporary and that the market will cool off.
Seif also told reporters on the sidelines of an e-banking conference in Tehran that the currency market is not a safe place for investors to bet on as a lasting ally “because forex rates will drop in the coming days and months”.
“[The government’s] foreign exchange income has improved on the back of $70 oil and, therefore, there is no reason for the forex market to become volatile in the long run,” Seif was quoted as saying by IBENA.
“The economy is in a good state and CBI controls the market. As I’ve said before, the forex market will become bearish in the last two months of the fiscal year [ending March 20].”
The CBI chief also warned investors speculating on the forex rally that they will eventually lose their money.
Seif had tweeted a message this week in which he forecasted calmer days for the forex market. But the rally has, nevertheless, caused a fervor in the market, prompting private sector figures who have traditionally favored “more real, higher forex rates” to express concerns about the volatility.
On Sunday, Mohammad Reza Pour-Ebrahimi, a senior lawmaker who chairs the Majlis Economic Commission, also penned a letter to President Hassan Rouhani, calling for a halt to rial’s depreciation.
The rial has slid against the US dollar more than 30% from the beginning of the fiscal year on March 21 but the rally intensified, particularly in late December–a time when forex rates commonly surge.
While on Saturday, the surge in forex rates was particularly steep, the rally slowed on Monday. The rial was quoted at 45,790 to the dollar by midday, having broken the resistance level of 46,000 before.
Euro and pound–two other high-demand currencies–diverged paths, with euro losing some ground and pound gaining again. The rial was quoted at 58,180 for the euro and 64,000 for the pound.
The gold market rally was also evident, with the benchmark Bahar Azadi gold coin gaining close to 50% on Monday. The coin fetched 15.34 million ($340), according to Tehran Gold and Jewelry Union’s website.
The sharp fall in rial’s value is reminiscent of the currency crisis in 2012 when the Iranian currency lost 70% of its value in a short period.
President Hassan Rouhani, slated to address the nation on television late Monday, is keen to avoid such a legacy.
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