Baku, Azerbaijan, Dec. 6
By Khalid Kazimov – Trend:
It appears that a decision by the Central Bank of Iran to cut interest rates was among main reasons that led investors to move to currency and gold markets, causing a considerable surge in the prices of foreign currency and gold in the country.
The rate of Iranian rial against foreign currencies has dropped dramatically over the past months as the US dollar was quoted at 41,813 rials in free market on Tuesday, a surge of 9.2 percent compared to early September. The Central Bank of Iran has increased the official rate of US dollar by 6.5 percent over the past three months.
In the meantime, the price of 18 karat gold has surged by 9.75 percent, posting 1,307,620 rials ($31.2) on Dec. 5. The gold coin also grew by 16.93 percent to hit 14,145,000 rials ($338.3).
Although speculations are flying around that the government is deliberately causing the surge in the prices in order to cover its budget deficit, President Hassan Rouhani has dismissed the accusations, assuring the nation about the stability of currency market over the current and next years.
Despite the sharp surge in the rate of foreign currencies against the Iranian rial, many experts still believe that the current rates do not reflect the real value of the country’s national currency as the rate of foreign currencies in the Iranian market has not grown in accordance with the country’s inflation rate.
The inflation rate in Iran’s urban areas for the 12-month period to the eighth Iranian calendar month of Aban (ended on Nov. 22) hit 9.9 percent, which indicates a rise by 0.1 percent compared to the preceding month.
The Central Bank of Iran says it has taken measures aimed at bringing balance to the currency and gold markets through supplying foreign currencies and gold coins.
This is while Iranian media reports suggest that the surge in the rate of foreign currencies has caused a hike in the prices of gold and gold coin in the market.
The media reports in the meantime mention that companies mostly settle their accounts with foreign partners in the final months of the year, which could also be among the main reasons behind the surge in the prices.
As per the Central Bank directive implemented in early September, banks and credit institutions were obligated to refrain from paying high interests and cap their interests on one-year deposits at the previously set 15 percent while paying a maximum interest of 10 percent to short-term deposits.