EghtesadOnline: Iran's foreign exchange market on Saturday witnessed a rise in the rates of all major currencies against rial, the national currency.
The US dollar continued to rise against the rial on Saturday, hitting a new low against the American currency. As markets opened on the first trading day of the week, traders had seemingly braced themselves to see the dollar cross the 45,000-rial threshold.
By midday, the rial was quoted at 45,290 to the dollar in Tehran's open market, according to Tehran Gold and Jewelry Union's website–a major official reference for exchange rates and gold coin prices. It was traded for as high as 45,620 by the end of the day to register a hike of close to 2.4%.
The new psychological barrier would have seemed far-fetched only a while ago and repeated assurances by the Central Bank of Iran's officials have done little to avert it.
Only two days ago, Valiollah Seif, the CBI governor, tweeted a message, comparing the hurried reaction of critics to the market's volatility to US President Donald Trump gleeful reaction over Iranian conditions.
"This happiness will not last long, and as with every year in the [closing Iranian] months of Bahman and Esfand, the market will cool down," Seif wrote in his tweet.
Bahman and Esfand cover Jan. 21-March 20 and are the two final months of the Iranian calendar and also a time when government has to close its annual budget and settle its accounts.
The euro, on the other hand, was traded for 56,480 rials to register a 1.4% rise while the pound was quoted at 61,840 rials, marking a 0.6% increase.
As with previous administrations, forex rallies at this time are used by critics to raise suspicions about the government seeking to plug its budget deficits through a weaker rial, which are vehemently denied by the government.
The free fall in rial is likely to embolden government critics who blame unsound policies for the weakening of the national currency.
According to some reports in the local media, moneychangers attributed Saturday’s bullish rally to a shortage of hard currency. They said CBI had refused to pump foreign currency into the market.
In the past similar circumstances, the bank would use its significant holdings of oil revenues to calm the market, which is also expected in the coming days.
The bank fixed the official exchange rate of the dollar at 36,639 rials on Saturday. The growing gap between the official and parallel rates would only further delay forex rate unification plans recommended by domestic pundits, business figures and the International Monetary Fund.
Other high demand currencies such as euro and pound also surged against the rial on Saturday. The benchmark Bahar Azadi gold coin also gained by almost 1% and fetched 15.17 million rials ($337), indicating that safe-haven markets continue to gain in popularity with investors.