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EghtesadOnline: Extending a week-long rally at Tehran foreign exchange market, the dollar advanced above the 260,000-rial level to reach the highest level in nine months.

The American currency closed at 265,200 rials in Tehran open market rising 4,500 rials or 1.7% compared with the session earlier.

The euro climbed close to 1.3% or 4,980 rials to 310,710 rials, the UK pound sterling gained more than 1.4% to change hands at 366,300 rials and the UAE dirham advanced above 70,000 rials gaining 2.93% or 2,150 rials to close at 73, 200 rials on Wednesday.

Uncertainty about the future course of events in the region including the escalating political-military crisis in Afghanistan, which impacts foreign trade with eastern neighbor, and rising inflation expectations due to deepening fiscal budget deficits are seen as the main drivers of the recent upsurge in the currency market.

Market observers also point to speculations surrounding the make-up of the Cabinet by the new President Ebrahim Raisi as a key factor giving rise to forex rate volatility, Eqtesad News website reported.

Businesses and stakeholders are waiting to see who will be appointed as the next head of the Central Bank of Iran and new economy minister -- the two main posts in the incoming administration directly related to the forex policy.  

On Wednesday Raisi introduced lawmaker Ehsan Khandouzi as his economy minister to the Majlis for the vote of confidence. There is much talk about change of guard at the CBI.    

The transition process, among other things, is seen as undermining the CBI’s leverage to intervene in the currency market as in the past. The CBI intervenes via its own exchange bureaus.  The dollar on Wednesday was tagged at 254,900 rials at the state-run Melli Exchange, affiliated to Bank Melli Iran -- 3,420 rials or close to 1.4% higher compared to Tuesday.  

The greenback also gained against the rial in the wholesale currency market, known as the regulated market, where it was up about 2% or 5,160 rials to buy 257,720 rials.

The regulated market is a network of banks and certified moneychangers working under CBI auspices and deals in wholesale trade.   

Gold Rises

Gold prices jumped Wednesday spurred by the spike in the currency market and a partial rebound in international bullion  markets.

The Emami gold coin rose close to 2.5% or 2.85 million rials to be traded at 115.85 million rials. The Half Bahar Azadi coin was worth 59 million rials, gaining a million rials or 1.7% compared with the session earlier. One gram of 18-karat gold was quoted at 11.1 million rials, up 1.7% in one day, according to Tehran Gold and Jewelry Union website.   

Gold edged higher in international markets on Wednesday as concerns over the rapid spread of the Delta coronavirus variant spurred some safe haven buying though gains were capped by bets on early tapering by the US Federal Reserve and a firm dollar, Reuters said.

Spot gold was up 0.2% at $1,732.50 per ounce recovering some ground after four straight sessions of declines and US gold futures rose 0.1% to $1,733.60.


Tehran Dollar foreign exchange