Market decline

Iranian stock market decline shows unease over nuclear talks

Another major drop in the Iranian stock market on Sunday highlighted the precarious state of the economy amid uncertainty over the future of nuclear talks.

Tehran’s stock index fell about 30,000 points, taking it to nearly 1.2 million points, from more than 1.4 million in early August when President Ebrahim Raisi (Raeesi) took office promising stimulate capital markets.

Fararu, a leading news site in Iran, said economic uncertainty resulting from a lack of progress in nuclear negotiations with the West is the main reason for the continued decline in the stock market. A capital markets expert told the website that there was a lack of investment capital and market lethargy.

The government, which faces a huge budget deficit, issued more bonds in August, draining capital markets. An expert said the government and the central bank use the stock market as a source of funding.

At the same time, First Vice President Mohsen Rezaei, who is one of Raisi’s top economics officials, told parliament on Sunday that the government would never print more money without proper support. , which would mean hard currency reserves. Iran has spent its reserves to make up for lost oil exports, banned by US sanctions.

Iran has ramped up its currency printing since 2018, when the United States withdrew from the 2015 nuclear deal (JCPOA) and imposed sanctions on Iran. Liquidity has quadrupled since 2017, leading to a nine-fold drop in the value of the national currency.

The rial is hovering around 275,000 to the dollar, showing no appetite for appreciation.

While Rezaei pledged a liquidity cap, hardliners demanded that the Central Bank of Iran (CBI) not deny money to an ambitious Raisi project to build a million affordable housing in the next 10 months. Most Iranian economists have called the draft plan impossible, given that it would require $ 10 billion to $ 15 billion, which the government does not have.

But Rezaei, who has a military background in the Revolutionary Guards with no experience in economic management, tried to sound optimistic when meeting with parliament. He said people can look forward to good economic news in December. But what he mentioned were old formulas of increased government control over prices and compensating ordinary people who have to bear an inflation rate of 50 percent.

He even called on Iranian expatriates to bring their “intellectual and financial capital back to Iran” and invest in the future. This seems like another optimistic expectation given the fact that up to $ 100 billion would have left the country in the last decade.

President Raisi’s first three months in office are coming to an end next week with no visible improvement in the economy. Critics already began demanding action rather than words in mid-October, as the president appeared to give daily orders to officials to address deep-rooted issues that cannot be addressed without the lifting of US sanctions.