Foreign exchange rates dropped Monday in Tehran after the central bank governor on state TV forecast much lower currency prices that triggered panic selling.
After rallying for three consecutive sessions the dollar lost 1.5% in the free market to fetch 241,000 rials. The euro was close by losing 1.4% or 4,000 rials to reach 292,810 rials, and the UK pound sterling was worth 332,221 rials down about 1% compared with a previous session. The UAE dirham was quoted at 66,800 rials – 1.4% lower than Sunday.
Observers say the chaotic market was apparently reacting to statements by Abdolnasser Hemmati on Sunday. "The forex market will descend and the dollar will fall below 200,000 rials," the head of the Central Bank of Iran told prime time TV. It was not clear on what premise he made the rare statement.
In the past he refused to set a target for currency rates. However, market watchers said Monday the bold forecast about the dollar falling below 200,000 rials weakened the army of currency speculators.
Hemmati said the CBI intervenes in the forex market to balance rates and that its leverage would get a further boost after billions of its currency reserves blocked overseas due to the US economic blockade are released.
Exchange shops affiliated to the CBI tagged the greenback at 238,670 rials down 0.23% compared with a session earlier.
The greenback declined 1.1% at the regulated market and was worth 233,000 rials. Iran’s regulated forex market is a network of banks and certified moneychangers under CBI auspices and deals in wholesale currency.
Local currency markets have been relatively calm in the past three months as investors exercise extra caution amid uncertainty over political and economic trends and what may unfold in the near future.
The greenback fell from an all-time high of 320,000 rials in mid-October as people rushed to the sell in anticipation of change of guard in the United States. The rial strengthened to a five-month high against the dollar reaching 210,000 rials on January 20.
Gold Down
Defying trends in world markets and falling domestic forex rates, the gold market took a drubbing on Monday. The Emami gold coin sold for 109.5 million rials, losing 2 million rials or 1.8% compared to the previous session.
Half Bahar Azadi coin was almost unchanged and was worth 62 million rials on Monday. One gram of 18-karat gold fetched 10.94 million rials, 129,000 rials or 1.18% lower compared to Sunday.
In international markets spot gold jumped 1% to $1,864.01 per ounce while the US gold futures rose 0.9% to $1,866.90.
