Iran uses gold coin sales to manipulate markets

Section:

Iran to Supply 5 Million New Coins to Gold Market

From Reuters
via TradeArabia.com, Bahrain
Friday, November 13, 2009

http://www.tradearabia.com/news/newsdetails.asp?Sn=ECO&artid=170337

Iran's central bank plans to inject 5 million newly-minted gold coins into the domestic market in order to control rising gold coin prices, according to the official IRNA news agency.

At Thursday's price of 2.8 million rials (about $280) for a standard gold coin in Iran, the total value of the planned intervention would amount to $1.4 billion, IRNA reported on Thursday.

The price of gold coins in Iran has risen sharply in line with developments on international markets, where gold bullion has risen 28 per cent this year to a record high $1,122.85 an ounce.

Many Iranians buy gold coins as wedding gifts and as a long-term investment. A standard gold coin weighs around 8.13 grams. It is also sold in smaller denominations of half a coin and a quarter of a coin.

"Five million gold coins, minted by the Central Bank of Iran, will be supplied to the market beginning on Saturday," Central Bank Governor Mahmoud Bahmani said.

The IRNA report did not give more details on the reasons for the central bank's planned gold market intervention, but it appeared in part to be an attempt to help bring down inflation and reduce liquidity in the economy.

Iran's year-on-year inflation stood at 7.6 percent in October, continuing a downward trend that began in late 2008.

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