Iranian markets stagnate amid sharp fluctuations in dollar and gold prices

Iranian media has reported a renewed increase in the price of dollars and coins in the markets. It is said that the price of coins has increased strangely. On the other hand, the buying and selling of currencies and coins has stagnated. A look at the turbulent week in Iranian markets.

The increase in the price of the coin, as well as the price of the dollar and other foreign currencies in the Iranian market, has once again fueled concerns about uncontrolled fluctuations in Iranian markets.

On February 21, the Khabar Online website wrote about the increase in the price of dollars and coins in Iran's domestic markets: "Iranian markets have had a turbulent week. The growth in the price of the currency, along with the strange increase in the price of coins, created the basis for the suspension of trading in the markets."

The question that has captured the minds of the public and officials alike is whether this week's turbulence will continue or whether the government and the central bank will be able to control and contain the fluctuations.

Some conservative representatives have also taken advantage of the opportunity and once again spoken out against Iran joining the FATF (Financial Action Task Force).

For example, Mohammad Dehghan, the vice-chairman of the provincial representatives' faction in the Islamic Consultative Assembly, said: "What sane person would ban the import of dollars when the country is having currency problems?"

This conservative representative claimed that implementing FATF requirements had caused the price of the dollar to reach 19,000 Tomans in domestic markets.

Iranian economic experts have repeatedly spoken about the losses resulting from Iran's failure to join the Financial Action Task Force. Among the losses resulting from this policy are the difficulties in utilizing the European financial mechanism, INSTEX.

Market stagnation

“Khabar Online” published a report on coin and currency transactions in Ferdowsi Square and Sabzeh Square, reporting a complete halt to the buying and selling of coins and currency. The reporter for this site wrote: “The volume of coin transactions in the market has reached zero and few people are willing to buy and sell coins and gold.”

The price of the coin crossed the four million and seven hundred thousand tomans mark on Wednesday, March 1. The buying and selling price of the coin fluctuated between one hundred thousand tomans and one hundred and eighty thousand tomans on that day.

Ebrahim Mohammadvali, head of the Tehran Gold and Jewelry Union, told the reporter of the aforementioned site about the recession prevailing in the buying and selling of coins: "With these prices, few people will take the risk of buying and selling."

The dollar has also crossed the 13,000 toman mark and is being bought and sold between 13,000 and 14,000 tomans. The prevailing atmosphere in the coin and currency markets indicates concern about the dollar and gold prices rising again.

A reporter for Khabar Online wrote about how the exchange offices operate: “When [dealers] were faced with a question about the price of the dollar, they would first inquire by phone and then quote a price between 13,000 and 14,000 Tomans. But they emphasized that this was the current price and that if you wanted to come back in an hour, the prices would undoubtedly go up.”

Rising inflation rate

On the other hand, according to official statistics announced by the Statistical Center of Iran, the inflation rate in February of this year reached 24 percent over a 12-month period.

The official news agency of the Islamic Republic of Iran, IRNA, announced on Thursday, March 21, citing the Statistical Center of Iran, that the inflation rate for February was about three percent compared to the previous month.

The official Statistical Center of the Islamic Republic of Iran announced that the highest inflation rate last year was in the "food, beverages, and tobacco" sector.

According to a news report published by IRNA, the prices of the aforementioned goods increased by more than 64 percent in February of this year compared to February of last year. The same report indicates that the prices of “non-food goods” increased by about 33 percent during the same period.

Analysis by the Governor of the Central Bank of Iran

Meanwhile, the Governor of the Central Bank of Iran, while confirming the increase in the dollar price, attributed the increase to the government's decision to allow the import of goods through the borders. He wrote on his Instagram: "One reason goes back to the decision to allow the import of dozens of goods through border residents and sailors. In the context of sanctions and currency restrictions, this type of decision has increased the import of non-essential goods during the sanctions period and has certainly increased the demand for foreign exchange in Sulaymaniyah, Dubai, and Herat... and subsequently in the Iranian market."

Hemmati also considered the psychological situation resulting from the failure to approve FATF-related bills and the uncertainty about extending the decision of the group's current meeting to remove or blacklist Iran to be ineffective, although he predicted that Iran would be safe from the risk of being blacklisted again until further notice.

I will urgently ask the esteemed cabinet to reconsider this resolution. Another way must be found for this to happen.

Today, the stability of the foreign exchange market is very important for the country. Of course, the important psychological factor of the summit has also added to the cause. Of course, the information received indicates that at this point, there is a high possibility of extending the suspension.

Source: DW