T he US dollar extended its gains on Monday, taking other major currencies higher against the rial. Investors shied away from the Iranian currency due to indications that Iran and the six world powers would miss their deadline in their nuclear talks.
Iran and the United States, Britain, France, Germany, Russia and China are in what may be the final phase of negotiations aimed at securing a deal on sanctions relief in exchange for limits on Iranian nuclear activities.
The negotiators have a June 30 deadline but diplomats close to the talks expect that to slip. A possible extension or the failure of negotiations would depreciate the rial, market experts in Tehran expect.
The greenback advanced 0.30% to 33,100 rials by 1147 GMT, as investors reacted to news from the nuclear talks in Vienna.
Iran’s foreign exchange market is usually the first to react to news from the talks, since the outcome of the deal determines rial’s exchange rate.
The dollar climbed to a three-week high of 33,330 rials by 0942 GMT on Sunday as France’s foreign minister said an accord to limit Iran’s nuclear program remains elusive due to disagreements on fundamental issues. The dollar lost all its gains later in the day.
Even the Central Bank of Iran raised the official exchange rate for the greenback by 0.15% to 29,320 rials on Monday morning.
Greece on Fire
The euro reeled from the Greek debt crisis after Greece imposed capital controls and ordered banks to close temporarily after the European Central Bank froze a vital financial lifeline following the breakdown of bailout talks between Athens and foreign creditors.
The euro fell 55 pips or 0.49% to 1.1112 per dollar by 1147 GMT on Monday, prompting it to even have a sharper fall against the rial. The European currency depreciated 0.67% to 36,950 rials versus the rial on Ferdowsi Street.
The single currency’s official exchange rate was lowered even further. The CBI revised its exchange rate down 1.24% to 32,296 rials per euro.
Greeks woke up to shuttered banks, closed cash machines and a climate of rumors and conspiracy theories on Monday as a breakdown in talks between Athens and its creditors plunged the country deep into crisis, Reuters reported.
After receiving no extra emergency funding for Greek lenders from the ECB, Prime Minister Alexis Tsipras somberly announced capital controls in a televised address on Sunday night to prevent banks from collapsing under the weight of mass withdrawals.
Greece has less than 48 hours to pay back €1.6 billion ($1.77 billion) of International Monetary Fund loans, and a default would set in train events that could lead to the country’s exit from the euro currency bloc.
Other Currencies
Other major gainers on Ferdowsi Street included the Australian dollar and the Emirati dirham on Monday.
The Aussie dollar went up 0.53% 25,667 rials by 1147 GMT while the dirham rose 0.52% to 9,023 rials, just off three-week highs, on their third consecutive day of gains.
The Turkish lira, however, fell 0.41% to 12,444 rials.
The lira and the dirham are gauges of commercial activity, as Turkey and the United Arab Emirates are gateways for importing consumer goods into Iran.
The Swiss franc also rose for the third consecutive day on Ferdowsi Street. The safe haven currency gained 0.28% and traded at 35,824 rials by 1147 GMT.
Stock Markets
Stocks had a mixed day. Tehran Stock Exchange’s main index ended the day flat at 64,332.90 points as renewed demand for Isfahan and Bandar Abbas refineries and Bank Saderat’s shares due to low prices stalled TSE’s decline.
However, Iran’s smaller and less manipulated over-the-counter market, the Iran Fara Bourse slid 0.37% to 721.67 points as steelmakers and petrochemical shares weighed on the index.
