EghtesadOnline: Currency rates surged in the open market in Iran following more than two weeks of bear market after demand for foreign currency rose amid expectations that the plunging forex rates had hit the bottom.
According to prices quoted to Financial Tribune by local exchange bureaus, the US dollar went up as high as 124,700 rials in the early hours of trading on Tuesday before climbing down to 123,000 rials as of 4:00 p.m. (local time), up 2.8% compared to Monday’s close.
The FX market was mostly bearish during the calendar month to July 22 amid Central Bank of Iran’s efforts to revive the value of the flagging national currency and pull the two rates in the open market and secondary market closer.
It appeared that CBI efforts had delivered as currency rates in Tehran hit six-month lows last week when the dollar was traded for 111,000 rials. However, this price was short-lived and the greenback quickly jumped to 114,000 rials. The rate almost converged with rates quoted in the secondary forex trading platform known locally as Nima (Integrated Forex Deals System), according to Financial Tribune.
Nima is a secondary market developed by the CBI where companies sell their export earnings at rates lower than the open market. The currency sold on Nima is only for importing goods.
According to the Persian daily Donya-e-Eqtesad, now that the rate difference in the two markets are gradually becoming a thing of the past, importers who traditionally procured their currency needs via Nima are increasingly turning to the open market.
Nima rates have remained relatively stable over the past ten days with a USD trading for less than 118,000 rials.
Observers also ascribe the higher rates to rising demand from investors based on the belief that the downward trend in FX rates have come to an end.
They are of the opinion that now is the opportune time to invest as further decline in currency rates is highly unlikely.
Gold prices, which are more influenced by the domestic forex market rather than the international rates, surged on Tuesday.
The benchmark Bahar Azadi gold coin was sold for 42.94 million rials ($350) on Tuesday, up 1.2 million rials, or 2.8%, compared to Monday’s close.
The Emami gold coin rose 1.17 million rials and changed hands for 43.95 million rials during the day.
Gold prices in the domestic market surged indifferently to the decline in the precious metal in global markets on Tuesday.
According to Reuters, gold prices slipped to a near one-week low as the dollar strengthened following a deal on extending a debt limit in the United States.
Spot gold fell 0.1% to $1,423.25 per ounce for the day. Prices had dropped to $1,413.80 earlier in the session, last touched on July 17.