The US dollar’s exchange rate also climbed 500 rials, reaching 41,500 rials to the dollar, according to the Association of Bureaux de Change Operator's website.
The British pound was traded for 50,100 rials on Tuesday, approaching its pre-Brexit rate in Tehran's market. GBP lost 3,000 rials back in June when Britons voted in favor of leaving the European Union.
Samad Karimi, the head of Export Department at the Central Bank of Iran, has listed five main reasons for the rally in forex rates, adding that the central bank is investigating the source of recent hikes in the market.
“Higher demand for overseas trips, the growth in Emirati Dirham’s rate [which is important for Iranian imports] and increasing activity of middlemen in the currency market are the main causes of recent swings in forex rates,” he said during a televised debate broadcast late Monday.
The Emirati dirham changed hands for 11,370 rials on Tuesday. It has been rising since early November, when it was at around 9,600 rials. The currency is widely used by importers who are also bracing for the Iranian New Year (starting March 21, 2017) when Iranians head for holidaying in the UAE.
“A drop in gold prices also impacted forex rates, as people prefer to purchase hard currency rather than gold,” he added.
Karimi noted that it is not possible to set a specific date for implementing plans for the unification of forex rates.
Central Bank of Iran Governor Valiollah Seif had earlier announced plans to end the country’s dual exchange rate regime by the end of the current Iranian year and let the rial float against other currencies in a “managed” way.
In the last 10 years, Iran has seen the rial go from 9,200 to 41,500 for $1, a depreciation of some 450%. Much of that collapse came in 2012 over the country's nuclear program, when the US banned the world's banks from taking part in Iran's economy and the European Union imposed an oil embargo.
However, under the 2015 nuclear deal between Iran and world powers, international sanctions against the country were lifted in exchange for it limiting its uranium enrichment. Since then, Iran has succeeded in increasing oil production to regain its lost market share while simultaneously signing deals worth tens of billions of dollars with airplane manufacturers Airbus and Boeing.
But the rial, initially buoyed by the accord, has now fallen. This was met by mixed reactions from business leaders, with many blaming the government's forex controls to keep the rial overvalued for the sudden shocks.
Rate Unification in Limbo
Pedram Soltanifar, the deputy head of Iran Chamber of Commerce, Industries, Mines and Agriculture, said the dollar’s bull run is very dangerous for the economy.
He believes that the government should have started to limit the number of goods receiving subsidized forex since a year ago.
“The unification of foreign exchange rates is now more costly for the government. I think the rate would be unified in the first half of the next fiscal year,” he added.
Emami Gold Coin also experienced a 3% growth in price on Tuesday and was sold at 12,208,000 rials, according to Tehran Gold and Jewelry Union's website.
The growth in gold coins’ prices was not surprising.
Mohammad Keshti-Arai, the head of TGJU, also predicts a surge in gold prices in the domestic market. He believes that domestic markets are not much impacted by international trends, as they are by forex rates, especially in the coming weeks.