0530 GMT: We begin with a curious story on the economy and currency. The Central Bank announced yesterday that it wants to pull back the advance sales of gold coins. As incentives to buyers, it is offering three options: 1) a buy-back at the current price for the gold; 2) credit to the would-be buyers with a 24% rate of interest; 3) two-year shares in exchange for the gold.
So why the sudden rush to retrieve the gold? There is no clue in the story in State outlet IRNA, but one possibility --- or even probability --- is that the Central Bank expects the price of gold to rise significantly in the near-future.
Why would that occur? Well, in a curious episode last weekend, the reported price suddenly dropped and the Iranian currency, after months of decline and even crisis, suddenly strengthened by 7 to 10%. International media that noticed blithely said that the surge was due to confidence after promising talks in Istanbul on Iran's nuclear programme, but we thought that was easy speculation. Instead, our suspicion --- although we have no specifics --- was that some domestic manoeuvring had brought the supposed rise in the Iranian Rial.
If that rise is artificial, and if Iran's economic situation does not suddenly improve, then we expect the Rial will quickly slide. Indeed, after being reported last weekend as strong as 16400:1 vs. the US dollar, the Rial is quoted at 18200:1 this morning.
And then there is the parallel story that the Central Bank, in a series of overnight operations, recently withdrew several billion dollars from Iranian financial institutions. The episode has brought questions from MPs, and even the rumour of the resignation of the head of the Bank, but no answer.
Why would the Bank need several billion dollars? Perhaps to buy back gold?
Posted via email from lissping
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