Financial Tribune- US President Donald Trump’s Friday speech ended the greenback’s three-week rally in Tehran’s foreign exchange market where the value of the American currency rose to its highest level since December 2016.
The US dollar lost 300 rials of its value against the Iranian currency on Saturday in Tehran’s unofficial foreign exchange market to fetch 39,998 rials, data on the Tehran Gold and Jewelry Union’s website indicate.
According to Pouya Jabal Ameli, a currency market analyst, the rial’s gain against USD has mostly to do with early expectations that Trump’s speech was going to be much harsher and contain a pullout from the nuclear deal, which did not happen.
Trump was mostly expected to formally pull out of the 2015 multilateral deal and impose a new set of sanctions in his Friday speech. That expectation had significantly affected Iran’s foreign exchange market, as the value of the most widely traded currencies registered notable jumps.
However, Trump announced that the US will remain in the Joint Comprehensive Plan of Action (nuclear deal’s formal name) reached under Obama in 2015, but he will not certify to Congress that Iran is in compliance under the Iran Nuclear Agreement Review Act of 2015. That was a decision that in effect put the ball in Congress’s court.
Abouzar Najmi, an international economics analyst, believes that the markets in Iran usually react prematurely to certain kinds of news but their potential consequences, when it materializes, do not have any serious impact.
“The rates of foreign currencies usually increase during the second half of each year, as the market is hotter and the demand for trading currency also increases,” he added.
Another reason behind the greenback’s recent rally was hectic activities of USD speculators in the open forex market aimed at pushing the dollar rate up to gain more profits.
Rumors circulated that USD is going to keep rising even above 50,000 rials in the next few days and most likely after Trump announces his new approach toward Iran and its nuclear deal.
However, the Central Bank of Iran defused speculators’ plans by injecting enough currency into the forex market to retain a relative stability.
According to Tasnim News Agency, CBI started distributing US dollar among selected exchange shops at 40,080 rials last Wednesday to once again take control of the turbulent forex market.
CBI’s move caused long rows in front of exchange shops and a rush in the market, but it seems that the plan has succeeded since the rally ended and the rates are also cooling off.
The US dollar started its rally on late November when its exchange rate in Tehran’s open market hovered around 38,920 rials and gained about 1,500 rials in 15 days and changed hands for 40,410 rials to mark its highest value in Iran’s forex market since December 2016.
In tandem with the US dollar, gold coin also registered a series of jumps to break its five-year record.
Mohammad Keshti-Aray, the head of Tehran’s Gold and Jewelry Union, told ISNA that political issues last week pushed up the prices of the precious metal in world markets to $18 per ounce.
“We expected that during the mourning month of Muharram, the volume of deals will fall and prices will decline, but gold’s bull run in world markets along with a surge in rates of foreign currencies in domestic markets resulted in gold coin registering its highest value in the last five years, i.e. above 13,000,000 rials ($325).