Economy, Business And Markets

Dollar Falls Against Rial

Dollar Falls Against Rial
Dollar Falls Against Rial

The US dollar tumbled against the rial on Tuesday leading a general decline in foreign currency exchange rates.

Several traders and owners of bureaux de change in Tehran told the Financial Tribune that the appreciation of the rial was due to intervention by the Central Bank of Iran to defend the national currency and calm the market.

Sources close to the central bank confirmed that the treasury may have sold more dollars in the market to halt the US currency’s advance. The central bank came under fire for its management of the forex market after the rial lost over seven percent of its value in the ending weeks of 2014.

The dollar fell 1.18 percent to 34,740 rials by 12:13 GMT on Tuesday, retreating below the 35,000 rial mark – a key level for the central bank – and ending its three day rally.

The dollar was on the retreat from a 1-1/2 year high this month, but regained half of the ground it lost in the previous three days, as investors declined to sell their reserves, leaving the market in short supply.

The euro and the British pound followed the greenback’s decline. The euro sank 1.2 percent to 40,830 rials on Tuesday while sterling retreated 0.76 percent to 52,960 rials holding just below the 53,000 rial level.

This is rial’s first positive day this week. It dropped against all major currencies on Monday extending losses for the third consecutive day as demand outweighed supply in Tehran.

 Gold Coin

The Azadi bullion coin however proved resilient against CBI’s maneuvers bolstered by increased safe haven demand in Tehran and gold’s appeal in the international markets.

Azadi edged up 0.19 percent to 10,360,000 on Tuesday, moving 20,000 rials above yesterday’s nine-month high. The bullion coin is poised to claim a new year to date peak if it passes the 10,410,000 mark.

Azadi’s sister coin, the Emami, rose further ttan Azadi, gaining 0.24 percent. The Emami changed hands at 10,385,000 rials on Ferdowsi Street.

The added demand for gold coins in Tehran came from the international markets as gold rose more than one percent on Tuesday to its highest since early September, as uncertainty about the extent of a stimulus program the European Central Bank is set to announce on Thursday drove investors into assets seen as lower risk.

Buying accelerated on a break of the previous day’s high, dealers said, as stops were triggered, taking the metal to a session high of $1,294.10 an ounce.

Spot gold was up 0.9 percent at $1,288.30 at 1232 GMT, while US gold futures for February delivery were up $11.70 an ounce at $1,288.60.Nervous financial markets are focused on Thursday’s ECB meeting, at which the bank is widely expected to unveil a quantitative easing program, and a Greek election on Sunday, which polls suggest anti-bailout party Syriza will win.

Gold posted its best week since mid August last week as risk aversion was stoked by the Swiss National Bank’s decision to scrap the franc’s peg against the euro.