US dollar nearly hits IRR50,000 mark for first time in history

US dollar nearly hits IRR50,000 mark for first time in history
By bne IntelliNews February 14, 2018

The US dollar skyrocketed during morning trade in Iran on February 13 to nearly hit IRR50,000 to a dollar according to several street dealers, only to close at the end of day trade at IRR49,000, Islamic Republic News Agency reported.  

The continuing decline of the rial comes as several top banking officials including the Central Bank of Iran governor Valiollah Seif said that hawkers should stop hoarding foreign cash and looking to make quick gains. Seif noted that people will lose as the Iranian banking system has plenty of cash to ward off any attack on the currency.  

The pound sterling also broke a long-standing record to close the day comfortably over the IRR71,000 level, making it one of the strongest trading currencies at Ferdowsi Street exchanges in downtown Tehran. Meanwhile, the euro, the second most popular cash currency for trading after the dollar, closed at IRR61,900 to one euro.

Iran’s IBENA reported that, according to presidential advisor Mohammad Baqer Nobakt, the rise in the dollar is part of a bubble trend and not likely to continue.

Nobakht said in a press conference on the issue, “The price of the dollar has risen, but it is a part of false market requests”, indicating that people buying were hoarding the cash for gain rather than proper usage.

He added “We have no problems in terms of currency, and we do not have a shortage of currency”, adding, “The foreign exchange earnings from our oil and non-oil exports are clear, and our imports are also clear, and this shows that we have no currency shortage at all".

Tehran gold traders, who often track the rate of the dollar, have also seen significant gains in their business. One Iranian Bahar Azadi sovereign gold coin sold for IRR15,100,000, moving up 1.9% over the past seven days alone.

CBI chief Seif told Tasnim news agency that taking a position against the rial would turn out to be a loser's game as he has the authority to pump as much foreign currency into the free market system as he feels is necessary at any point. He added that the rial was likely to rebound in the next few months.

“Those who are investing their resources in foreign exchange will suffer losses in the end,” he said, adding that rising oil prices were giving Iran more resources to support its currency.

“Since the price of oil has reached $70 a barrel, there is no reason to see long-term fluctuations in the foreign exchange rates,” Seif noted at the time.

Iran currently holds more than $132bn in foreign cash reserves and $600mn in gold, local media reported on January 23. With ample reserves of foreign currency in the CBI’s vault, the implication is that people should have nothing to worry about regarding the rial’s stability. Indeed, data in the Central Intelligence Agency’s (CIA) December 2017 factbook edition can be said to back up that point. Iran has higher currency reserves than more than 156 other countries around the world including Norway, Australia and Turkey.

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