The rial regained some lost territory against the US dollar on Wednesday after the Central Bank of Iran intervened through its affiliated moneychangers.
CBI’s role was conspicuous from the early hours of trade on Tuesday when its exchange bureaus first increased the currency rates only to lower it later.
With the forex volume offered by CBI moneychangers outweighing those by dealers in official markets, the former managed to take the lead and control the rates.
The greenback fell more than 5% in one day, and was traded for 132,000 rials on Wednesday, after soaring above the psychological level of 140,000 rials a day earlier.
One euro was worth 144,000 rials, down 6,000 rials from Tuesday’s close and the UK pound sterling sold for 173,000 rials.
Addressing reporters on the sidelines of a Cabinet meeting on Wednesday, the CBI boss Abdolnasser Hemmati said the CBI has complete control over the forex market.
“The CBI is capable enough to participate in the market and play its role by balancing demand and supply” he was quoted as saying by IRNA.
Addressing middlemen and currency dealers, he said “they underestimate the CBI’s power”.
The senior banker again recommended people not to put their money in the currency market, highlighting the inherent risks in highly volatile markets.
Earlier on Monday, Hemmati had said that the CBI has not interest in the use of excitement to tackle fluctuations in the currency market.
In No Hurry
The CBI will not rush and prefers to draw on patience, while assuring the people the “bank will do all it can to restore stability to the currency market as it has done in the past”.
There are market analysts who ascribe the setback in currency prices to new CBI restrictions on bank transactions.
In bid to promote anti-money laundering regulations, the CBI on Wednesday enforced new restrictions on online transactions based on which transactions via all inter-bank systems will be limited to 1 billion rials ($7,400) per person per day.
In a similar measure last December, and in
the midst of efforts to stabilize the currency market, the CBI limited daily transactions via point of sale devices to 500 million rials for a single debit card and up to 1 billion rials for any national ID number.
Since autumn 2018 and after a period of steep volatility in the currency market, currency rates have been relatively stable up until mid November, which was concomitant with the time when the government put into effect its controversial gasoline rationing scheme and tripled pump prices.
As acknowledged by market analysts and top government officials, including the CBI cheif, the move gave rise to inflationary expectations among the public and rattled the markets, most noticeably, the currency market.
Gold Loses Luster
Downturn in currency prices also bucked the bullish trend in the domestic gold market. Gold prices in Iran closely follow trends in the domestic forex market and comparably take less influence from international bullion trade.
Each Imami gold coin was sold for 45.56 million rials on Wednesday, down 500,000 rials, or 1 %, compared to Tuesday’s close. Benchmark Bahar Azadi also fell 0.7% and sold for 45.4 million rials, the Tehran Gold and Jewelry Union said.
On the international front, gold moved in anarrow range on Wednesday, as cautious investors held back from making big bets ahead of the US Federal Reserve's monetary policy statement later in the day, according to Reuters.
Spot gold was little changed at $1,464.01 per ounce and US gold futures were flat at $1,468.40.
