Showing posts with label Currency Exchange. Show all posts
Showing posts with label Currency Exchange. Show all posts
Sunday, February 05, 2012
Arresting Data
The administrator of Mesghal.com has been arrested. He has been accused of attempting to distort the market as part of a plot to dis stabilize the economy. Mesghal.com is a website dedicated to covering currency and precious metal markets in Iran and across the globe. It has become the reference for many who work in these markets in Tehran.
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.
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.
Tuesday, August 26, 2008
USD is Gaining on Rial
There has been an increase in USD versus Iranian Rial in Tehran currency exchange markets. However I am not sure if this increase is due to USD gaining against Euro, or it is partially due to inflationary conditions of Iran’s economy. The high inflation usually causes household to seek other ways to save in Iran. The list of investments and savings is topped by purchasing properties and houses, which usually results in an increased in housing prices. The next item is purchasing gold and hard currencies.
An increase in USD value in Iranian markets could be due to increase in popular demand to save in hard currencies such as USD and Euro. I also wonder if sanctions have something to do with it, by limiting the number of suppliers of USD to Iranian merchants and private sector. One simple increase in an economic index and so many questions!
An increase in USD value in Iranian markets could be due to increase in popular demand to save in hard currencies such as USD and Euro. I also wonder if sanctions have something to do with it, by limiting the number of suppliers of USD to Iranian merchants and private sector. One simple increase in an economic index and so many questions!
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