EghtesadOnline: The rial erased earlier losses in Tehran on Saturday as the dollar dipped and panic selling continued.
Impacted by updates on the presidential elections in the United States, the greenback went into a tailspin on Friday as prospects of a strengthened rial and anticipated change in the US government weakened sentiments.
The USD lost more than 9% on Saturday, dropping by 23,000 rials to reach 247,000 rials. The currency had lost 9% a session earlier, dropping from 295,000 rials on Wednesday.
Other major currencies also plunged against the rial. The UAE dirham was down 11%, losing more than 7,700 rials and fetched 68,500 rials. The Emirati currency had reached an all-time high of 82,000 rials in mid-October.
The euro lost 4.7% or 14, 500 rial to reach 306,500 rials and the UK pound sterling closed at 339,600 rials, 4.5% lower compared to prices the day before, eghtesadnews reported.
Forex rates were also lower at exchange shops affiliated to the Central Bank of Iran. The dollar at Melli Exchange, affiliated to the Bank Melli Iran, was tagged at 244,960 rial down 18,600 rials compared to Thursday.
As in the past two sessions, Melli Exchange refused to buy currency from the people on Saturday, quoting only selling rates. Observers say this refusal could mean that the regulator doesn’t recognize the current rates and wants it to drop further.
Iran's currency market has displayed strong sensitivity towards the US presidential elections. Forex rates went up on Wednesday as some currency speculators anticipated a second four-year term for the embattled Donald Trump, seen by many as a underdog, and his rabid anti-Iran policies.
Trump's reelection could translate into higher economic pressure on Iran's economy and further undermine the value of the national currency that has been in a freefall for months.
However, with Trump's Democratic challenger Joe Biden getting closer to victory, the dollar has been losing luster as panic selling in Iran continues. Speculators say the rial could rebound if Biden returns to the landmark nuclear deal Iran signed with the six world powers in 2015. Trump abandoned the agreement in 2018.
Soon after withdrawing from the deal, known officially as Joint Comprehensive Plan of Action, he announced his infamous “maximum pressure” policy and imposed the toughest ever sanctions against Iran's key oil, banking, insurance, shipping and auto sectors.
Gold prices declined at the same pace as forex. Emami gold coin lost more than 6.5% or 8 million rials on Saturday to reach 123 million rials. Half Bahar Azadi coin was down by 4 million rials to 68 million rials, posting close to 6% daily fall. One gram of 18-karat gold was worth 11.42 million rials indicating 7% decline.
Gold rose on Friday in international markets and was set to post its best week since July as the dollar weakened and increasing chances of a Biden victory in the presidential election boosted hopes for a larger coronavirus relief bill, Reuters reported.
Spot gold rose 0.2% to $1,951.51 per ounce on Friday, on track for a 3.9% weekly gain, the most since late July. US gold futures settled up 0.3% at $1,951.70.