Prices in Tehran’s currency and gold market dropped sharply as official trade resumed on Saturday after the annual two-week Nowrouz holidays, marking the Iranian new year.
The dollar lost close to 4% against the national currency to fetch 246,800 rials in the open market down 9,700 rials in one day.
Similarly the euro and pound sterling fell 2.8% to be worth 298,100 rials and 348,370 rials, respectively and the UAE dirham lost 2.9% to buy 68,920 rials.
The greenback was worth 244,700 rials at licensed exchange shops affiliated to the CBI, down 3%, or 7,430 rials. It also dropped 2.8% or 7,000, rials in the regulated forex market and was quoted at 243,100 rials. The market is operated by exchange bureaus dealing in wholesale currency trade.
Market observers link the decline in forex rates to a combination of factors, namely CBI intervention and declining expectations of higher rates arising from political developments.
The dollar on Saturday pared almost all gains made during the holiday season when markets were officially closed. The CBI blamed currency speculators for "trying to sell at higher rates when markets are officially closed."
Arguing that the hike was unreasonable, the regulator warned that it will "react appropriately" to the rising rates. It was not clear what the CBI can or would do to rein in the high rates.
The prospect of United States returning to the Iran nuclear deal is another factor unnerving avaricious currency dealers who envision a weaker dollar if and when the US under President Joe Biden rejoins the historic nuclear agreement and banking and economic sanctions are eased.
This prospect improved after talks were held Friday by the joint commission of the parties to the nuclear deal officially known as the Joint Comprehensive Plan of Action (JCPOA).
In the virtual meeting participants discussed the possibility of the return of the US to the JCPOA that was abandoned in 2018 by the controversial former president Donald Trump who reimposed new economic sanctions that year against Iran.
Gold in Free Fall
Gold prices logged big declines Saturday influenced mainly by lower forex rates. The Emami gold coin slipped to 107 million rials losing 4.3 million rials or more than 4% compared to the earlier session.
Half Bahar Azadi gold coin dived deeper losing 4.6% and was worth 64.5 million rials. One gram of 18-karat gold was selling for 10.54 million rials, down 2.84%, according to Tehran Gold and Jewelry Union website.
Prices declined sharply in the domestic bullion market defying an upward trend in precious metal prices in international markets.
Gold rose over 1% on Thursday buoyed by a retreat in the dollar and US bond yields, while grim US jobless data clouded the outlook for an economic recovery, adding to the metal's safe-haven appeal, Reuters reported.
Spot gold rose 1.2% to $1,727.86 per ounce. US gold futures settled up 0.7% at $1,728.30. Most markets were closed for Good Friday on April 2.
