Date: 09 Mar 2000
Time: 15:30:32
Remote Name: 156.29.145.175
03/09/2000 Reuters English News Service (C) Reuters Limited 2000.
TEHRAN, March 9 (Reuters) - The Iranian rial has risen to an 11-month high against the dollar on optimism over the possible lifting of some U.S. sanctions and strong oil prices, traders said on Thursday.
On Tehran's illegal but highly active black market, the currency was trading at 8,140 rials to 8,160 rials to the dollar compared to about 8,200 per dollar a week earlier.
"The central bank has been selling dollars to cover its needs for rials and there has been low demand for dollars from pilgrims travelling to Saudi Arabia who have been able to buy hard currency from (state) banks," one trader said.
"Strong oil prices have totally changed the situation. The government now has enough hard currency to sell to traders and travellers abroad," London-based money trader Ali Pakpour said.
"The rial has not been so strong against the dollar since about early April 1999," Pakpour told Reuters in Dubai.
Dealers reported low demand for dollars, bought by many Iranians as a hedge against inflation, because of the optimism sparked by a U.S. newspaper report that the United States might lift a ban on Iran 's key non-oil exports - carpets, pistachios and caviar.
A visit to Tehran this week by German Foreign Minister Joschka Fischer, the first such trip since 1992, also raised hopes about improved trade and investment ties, dealers said.
Traders said the strengthening of the rial also marked the first time the currency's black market rate has been stronger than an official rate set on the Tehran stock market. The rial closed at 8,151 rials to the dollar on the bourse at the end of the trading week on Wednesday.
"There is optimism because a lifting of the sanctions would boost Iranian exports and strengthen the rial further. This in turn could lower inflation and help the economy to come out of the current recession," Khosrow Sobhe, spokesman for the Iranian Carpet Exporters Association, told Reuters.
Rug exports are Iran 's biggest hard cash earner after oil.
The rial has been gaining strength in recent months on high oil prices, climbing 16 percent against the dollar since hitting a low of about 9,450 rials per dollar last July.
Oil prices at nine-year highs have been a boon for Iran , among the world's largest crude exporters. Tehran depends on petrodollars for about 80 percent of its hard cash income.