EghtesadOnline: Major currencies continued to gain against the rial on Saturday with the dollar breaking past the critical 190,000 rials.
The greenback was traded at 190,500 rials for the day, up more than 2,500 rials overnight, marking the highest ever rate in Iran.
It gained more than 5% against the rial during the course of a week. Saturday’s hike put the currency gain against the rial at 18.3% in the first quarter of the current fiscal year that started on March 20.
To reduce the widening gap with open market rates, Central Bank of Iran-affiliated moneychangers pushed up the forex prices. The dollar was worth 185,940 rials in bank-based money exchanges, 1.33% higher than Thursday, according to the Tehran Gold and Jewelry Union website.
CBI keeps an eye on currency rates largely through its affiliated moneychangers by seemingly balancing supply and demand.
The currency market sailed in relatively calm waters for nearly three months before thrusting upwards with added vigor.
Market observers see the government’s recent decision to stop allocating cheap currency (1USD = 42,000 rials) to fewer goods as a move that sent a negative signal to the forex market that the CBI is facing a shortage for foreign currency, the Persian-language economic newspaper Donya-e-Eqtesad reported.
News outlets reported that the government shortened the list of imported goods eligible for subsidized currency and allowed selected food and medicine importers to buy foreign exchange from the secondary market, known as Nima.
The decision has also pushed up Nima rates in recent days as demand soared in the currency market. One dollar at Nima is sold for about 160,000 rials.
Moreover, the government has also allowed manufacturing companies to increase prices because they have to buy foreign currency at higher rates for imports.
The negative political climate is also seen as one of the main factors that has added to volatility in the currency market over the weeks.
It appears that currency dealers and speculators were riding on a negative psychological atmosphere after the International Atomic Energy Agency passed a resolution last week criticizing Iran.
The IAEA passed a resolution on Friday calling on Iran to fully cooperate with the UN agency in implementing its NPT Safeguards Agreement and Additional Protocol and satisfy IAEA requests.
CBI Governor Abdolnasser Hemmati on Friday warned currency dealers that they should be wary of “negative signals” coming out from the dire psychological fallout of the IAEA resolution.
The gold market was also bullish amid soaring currency prices and spike in the precious metal in international markets.
Each Emami gold coin was sold for 78.4 million rials on Saturday, 0.8% higher compared to the previous day’s close. The benchmark Bahar Azadi climbed almost 2% to 77 million rials and one gram of 18-karat gold fetched 7.9 million rials.
Gold prices delivered higher gains compared to currency rates during the first quarter of the current fiscal year, thanks to the systemic rise in the price of the yellow metal in global markets.
Gold rose more than 31% in the domestic market in the past three months. The precious metal gained more than 19% globally, according to Donyay-e-Eqtesad
Globally gold gained on Friday as a rise in the coronavirus cases raised concerns over a second wave which could compel governments to implement more lockdowns.
Spot gold was up 1% at $1,740.03 per ounce while US gold futures rose nearly 1% to $1,747.90 per ounce.
Spot prices reached their highest since 2012 last month at $1,764.55.