Economy, Business And Markets

Rial on the Retreat

Rial on the RetreatRial on the Retreat

The rial dropped against all major currencies on Monday extending losses for the third consecutive day as demand outweighed supply in Tehran.

The US dollar regained half of the ground it lost during the past month, breaking above the 35,000 rial per dollar mark as investors declined to sell their reserves, leaving the market in short supply.

The euro and sterling also cut their losses versus the rial and gained versus the Iranian currency.

Benchmark Azadi gold coin hit a new nine-month high, keeping the momentum it had gained from increased international gold prices following the Swiss National Bank’s sudden decision to abandon its policy (instituted back in 2011) of capping the currency at Sfr1.20 to the euro last Thursday.

“There were no significant developments in the market but there seems to be a supply shortage and no one’s got foreign currencies,” a bureau de change owner told Financial Tribune. “Everybody has become a buyer and nobody is selling” said a veteran currency trader.

The greenback was one of the major gainers versus the rial, rising 1.44 percent to 35,150 rials by 14:56 GMT on Monday.

Sterling rose 0.96 percent to 53,360 rials for the day, its highest since Jan. 11, while it retreated from a seven-year high against the euro on Monday in the forex market.

The euro, which was slugged last week due to the SNB move, surged 1.5 percent versus the rial and hit 41,320 rials. Traders braced for a crucial meeting later in the week which could see the European Central Bank take its boldest steps yet to revive the euro zone’s moribund economy.

Azadi also advanced 0.98 percent to 10,340,000 rials on increased demand for a hedge in Ferdowsi Street – center of currency trade in Tehran. The bullion coin is poised to claim a new year to date peak if it passes the 10,410,000 mark.

This was while gold steadied near four-month highs, with investors cashing in some of the previous week’s hefty gains, but prices remain supported by volatility in wider markets which boost the metal’s appeal as a haven from risk, Reuters reported.

Spot gold was down 0.5 percent at $1,274.35 an ounce at 15:38 GMT, while US gold futures for February delivery were up $1.40 an ounce at $1,278.30.

The major gainers versus the rial were the Norwegian krone and the Emirati dirham. The Norwegian krone surged 1.97 percent to 4,650 rials while the Emirati dirham jumped 1.59 percent to 9,610 rials.