Friday, January 27, 2012

Increasing the Interest Rate

I am not so sure if increasing interest rate will affect M1 in Iran. Still it seems it has been done to encourage people to keep their deposits in the banks. That is being said, I wonder if this means banks are going to charge a higher APR as lenders. One has to wait and to see. All in all currency market seems a bit calmer. Although I do not know if this is due to the government's edicts or its new policy regarding interest rate.
There is one silver line though; Iranian public and media have been talking about economics so much that I think they are going through a crash course on Econ101. I hope this increases the public awareness of market dynamism and shifts in the economy.

Wednesday, January 25, 2012

Bridge to Iran

Caty Borum Chattoo has kindly forwarded me an email announcing airing "BRIDGE TO IRAN" which a series of documentaries already produced by Iranian filmmakers on Iran. It reads:

San Francisco, Calif., January 23, 2012 – Against a backdrop of rising cultural and political tensions in Iran, Link TV will premiere its four-part documentary TV series, “BRIDGE TO IRAN,” beginning on February 14 at 7:30 p.m. ET. Presented by Iranian-American host, Parisa Soultani, the series examines issues such as the role of women in Iranian politics, intimate conversations between the exiled former queen of Iran and a former dissident, and the historically powerful role of the arts – particularly theatre and cinema – within Iranian society. In each episode, in-depth discussions with top Iranian filmmakers provide a unique lens into some of the challenges and realities facing Iranians during a time of increased instability – including censorship, sanctions and safety concerns. New episodes will air at 7:30 p.m. ET/4:30 p.m. PT on February 14, 21, 28, and March 6 (with repeat broadcasts); more information about all episodes are available online at

“Bridge to Iran,” a co-production of Link TV and CEM Productions, was developed as a response to the cultural and political tensions that have developed between Iran and the U.S. since the Iranian revolution.

Viewable Online at
---I have visited this website. Some of them are great works such as Iran: A Cinematographic Revolution, which reviews Iranian motion picture industry and traditions, We Are Half of Iran's Population by Rakhshan Bani Etemad is a great look into women's issues and challenges insider. Frankly I am lost what a movie like  The Queen and I  has to say about Iran of today, since it is a biographic work. It might have some value for those  interested in Iran's contemporary history, however I do not see how it adds to its viewers' understanding of Iran of 2012.
Overall this is an admirable effort to bring some understanding of Iran to an American audience. However against a backdrop of war the documentaries do not include anything on the human cost of war. Particularly since the memory of Iran-Iraq eight year long war is so fresh and its wounds are still bleeding. Still they offer a uniquely authentic outlook of Iranian cinema and Iranian women issues. 

Sunday, January 22, 2012

Is Economy Sinking

US dollar was traded at 20'000 rials, British pound at 30'000 and euro at 25000! Is the economy sinking? I do not think so. However it sure has hit a crisis. Unfortunately these changes are happening at the beginning of new year shopping season in Iran (Iranian new year begins on the first day of spring). Traditionally this means an increase in demand and prices all over the marketplace. To this if one adds the declining rial, it seems inflation is ready to take off.

Saturday, January 21, 2012

Separation: A New Window to Iran

Separation is still attracting attention on the global stage. And this has provided many with a rare way of understanding Iranian society.  
A few days ago Separation was named the Foreign Language Film of the Year at 32nd London Film Critics’ Circle Awards on Thursday. Asghar Farhadi was named the Screenwriter of the year with film’s supporting actress, Sareh Bayat, winning the Best Supporting Actress award. After winning Golden Globe, the movie is seen as a front runner for Academy Awards and was shortlisted on Wednesday.
As the deadline for Academy Awards approaches more critiques of Separation appear in prints in English speaking media. Thursday and Friday several reviews were printed in Christian Science Monitor, Washington Post, Washington Times, Miami Herald, San Francisco Chronicle, San Francisco Examiner, Canadian National Post and the Globe and Mail as well as several others media outlets.  Reviews, interviews and opinions on the movie are plenty and the praise is universal. Although some critiques use a simpler language than others. Michael Phillips from Chicago Tribune called it “the finest film you'll see this month”.  Anita Katz for San Francisco Examiner writes “Picture a mix of Iranian realism, Italian neorealism, Bergman-esque marital drama and Sidney Lumet- style crime-and social-issue-themed vital storytelling”. The movie has helped an understanding of Iran which was rare up to now. Philip Kennicott writes “10 years hence perhaps we will all look back at films such as Asghar Farhadi’s “A Separation” and think: That helped”.
It seems Separation¸somehow, has brought the world closer to understanding a sophisticated and yet in transition society. Unfortunately there is no academy award for that. 

Tuesday, January 17, 2012

Gold Rising Again in Tehran

Gold coins, known as Bahar Azadi, are again on the rise in Tehran. Their price has just passed 7'200'000 Rials! to give you a perspective that is more than what a government retiree receives in a month. The new rise has began almost immediately after government opposed increasing interest rates for banking deposits. As the volatility in market increases people are more desperate to find new means to save their hard earned savings. As banks are not offering compatible returns, the options are the traditional ones: gold, hard currency and real estate.
The constant increases in money supply in recent years amplify the effects of their despair. It seems there is a large amount of money in circulation, one might even call it the beast of liquidity. The beast is causing havoc in currency and gold markets as it runs wild. In the meantime middle class shopping power is declining rapidly. Mr. Asgar-Ouladi a prominent businessman who chairs Iran-China Chamber of Commerce predicted "In six month there will be severe shortage of food and other necessities in the country." Well no one hates a declining currency like an importer. How anyone could expect the consumers to remain calm hearing these prophecies?

Will write more on this soon.

Sunday, January 15, 2012

Iran: Women Unemployment, Still High

I am checking the report for last year, Spring 2010 to Winter 2011, the statistics on women are very interesting.

  • The unemployment among women still is much higher than unemployment among men: %20.5 versus %11.9 overall, %39.7 for women age 15 to 29 years versus %21.8 for men of the same age group. 
  • The increase in unemployment for women is also higher than the increase in unemployment for men. Women age 15 to 29 years experience %8.7 increase in unemployment from the previous year, for men age 15 to 29 years old this has been %2.1. This means a proportionally larger number of women are unemployed. This confirms previous findings (Abbasi and Dadpay among others) that youth and women are the most vulnerable group in Iran's labor market. They usually feel the burden of economic downturns first. 
  • Still close to one out of every three women work in agriculture, %28 versus %17.5 for men. Still almost half work in services, %47.6 of women and %48.8 of men.
Question is what should be the focus to combat women unemployment? Employment opportunities equality might be the first place to start. The disproportional unemployment among women might be hinting at a still segregated labor market.

Of course these are only the descriptive analysis and some very basic intuitions. More can be found out through modeling and further analysis.  

Saturday, January 14, 2012

Has Iran's Economy Lost One Million Jobs?

Ebrahim Alizadeh in a report for Jahan Sana'at daily in Tehran has written that in the past year one million job has been lost in Iran. His report prompted me to check the original report from Statistical Center of Iran (SCI).  The latest report which covers Iranian calendar year of 1389, from March 2010 to March 2011, includes a summary statistics for Iran:

  • Iran labor force for 10 years and older population in this year has been 23,875,023 with a participation rate of %38.3 (men's participation rate at %62.1 and women's participation rate at 14.1%). (Ref. Table 1 of the report).  The participation rate has declined %0.6 since its previous year where it stood at %38.9. 
  • In 1388 (March 2009 to March 2010) SCI reported that 21,000,079 were employed in agriculture, service and industrial sectors, in the following year this number is 20,656,621. This means 343,458 jobs lost on a year to year basis. 
  • Looking at seasonal data however we see in the winter of 2010 the number of unemployed rises to 3,420,836 with labor force falling to 23,367,266. This means a total employment of  19,946,430. This means a loss of 1,053,646 jobs. In this I believe we have to take into account that winter does reduce activities in agriculture and construction. This could be the effect of the season. However still 343,458 is a rather large number. 
Unemployment has increase also by 1.6 percent from %11.9 in 1388 to %13.5 in 1389. Given that the participation rate is falling I believe that we are witnessing a discouraged workers' effect taking place in Iran. Thus I agree with Jahan Sana'at conclusion that the government claim of success in combating unemployment is actually a misconception. The data shows the supply of labor has been falling and not its demand.

Friday, January 13, 2012

Dollar & Rial in Tehran

There are several reasons for the recent events in currency market in Iran.

First USD has been and is undervalued in Tehran. Iranian governments since Pahlavi always make the value of Rial a matter of political prestige. According to politicians a strong Rial meant and means a strong economy. However this is an illusion, since this claim is only justifiable if Iran had a strong export base. Iran exports oil, which many consider capital. Thus governments, past and present, have maintained a strong Rial using oil revenues.

Second market has realized this a long time ago, Iranian consumers and businesses have witnessed the collapse of Rial in the past. In a way it was expecting USD to gain value. Imposing sanctions on Central Bank of Iran served only as a trigger to ignite a shock. It signaled the market that CBI might not be providing market with paper money, hard cash, in future. USD was already on the rise, from 11650 Rials at the beginning of summer to 13000 Rials at the beginning of summer. This steady rise was accelerated by the news of sanctions.

Still CBI and government keep a brave face, fighting the tide. The question is if Iranian manufacturers would benefit from these events. They are already squeezed harshly by losing their subsidies. In the past years the undervalued USD and strong Rial encouraged massive imports. Many have already lost their consumers and local markets to Chinese products. The rising dollar for them means increasing cost of parts and necessary material. Acquiring both has already been made impossible by sanctions.

Taking into account the increased cost of transactions and the government increasing fiscal responsibilities, particularly paying out the cash subsidy, one would expect to see a further rise in USD in Iran's currency exchange. It seems many on the ground has already adopted this.

Friday, January 06, 2012

Back in Atlanta

After almost four weeks in Tehran I am back in Atlanta. Rial value is depleting at the best, which was expected. So many things to say, one does not know where to start!