Volatility on the foreign exchange market of Iran

English Section / 16 aprilie

Volatility on the foreign exchange market of Iran

Versiunea în limba română

Asian markets, in slight decline Oil prices fall

Iran's currency, the rial, is volatile as geopolitical tensions in the Middle East were fueled by Tehran's attack on Israel late Saturday in response to an alleged Israeli attack earlier this month.

On Sunday, the Iranian currency depreciated, temporarily, to the record minimum level compared to the American one, reaching 705,000 units/dollar on the unofficial market, according to Bonbast data. The Iranian currency later recovered some of its losses to around 670,400 rials/dollar on Sunday afternoon. A lower rial means more inflationary pressures in Iran, where the annual inflation rate has hovered around 50 percent for the past five years.

Yesterday, the US dollar was 0.15% lower against a basket of major currencies, also depreciating against the Iranian rial and the Israeli shekel. One rial was quoted at 658,000 units/dollar yesterday, according to whec.com.

Against this backdrop, Asian markets were largely down yesterday, although they pared their initial heavy losses during the trading sessions. Stock markets in Tokyo, Singapore, Mumbai, Taipei and Manila lost less than 1%, with similar declines in Hong Kong, Seoul, Sydney and Wellington. The Nikkei 225 index of the Japanese market depreciated by 0.7%, the South Korean Kospi - by 0.4%, the S&P/ASX 200 of the Australian stock market - by 0.5%. Hong Kong's Hang Seng fell 0.7%.

"All eyes are watching if there will be any response from Israel, and the markets will probably be volatile in the coming days, as a reaction to any geopolitical headlines," says, according to AFP, Saxo Bank analyst Redmond Wong.

Oil, on a negative course

Oil futures fell yesterday after Goldman Sachs described Iran's attack as "relatively limited". However, the potential Israeli response to Iran's attack remains highly uncertain, and if it occurs, it will significantly influence the stability of regional oil supplies.

According to Goldman Sachs, Iran's crude output rose to about 3.4 million barrels per day, accounting for 3.3% of global supply and marking an increase of about 0.6 million barrels per day over the past two years, most exports being directed to China.

While oil prices currently include a risk premium of $5-10/barrel due to potential supply disruptions, they may rise in response to any escalating developments, according to euronews.co.

The quotation of American West Texas Intermediate (WTI) oil for delivery in May was 84.95 dollars per barrel on the US market, at 08:54 local time, down 0.8% compared to the previous session. European Brent oil for June delivery was quoted at $89.64 a barrel, down 0.9%.

Also yesterday, precious metals recorded modest gains. For example, the price of gold for delivery in June appreciated by 0.03%, to $2,374.90 an ounce on the US market, at 08:52, while the spot quote rose by 0.6%, to $2,358.98 ounce, according to Bloomberg data.

The slight rise in the price of gold suggests that, while investors remain cautious, there is no major shift towards this traditional safe-haven investment, likely due to a strong global effort to prevent an escalation of the conflict between Iran and Israel. Instead, silver experienced a significantly higher increase: +1.6%, to $28.77 an ounce on the US market, at 08:52.

Industrial metals had higher gains yesterday after the London Stock Exchange banned trading in metals from Russia. The London market established these bans on aluminum, copper and nickel products. Thus, the Shanghai Futures Exchange remains the only major commodity exchange in the world that accepts metals of Russian origin.

"The liquidity of Russian metals on the European and American markets could further decrease, and global trade flows will also be reshaped," said Wang Rong, analyst at Guotai Junan Futures brokerage house in Shanghai, quoted by scmp.com .