The price of the dollar in Iran in the last days of Rouhani’s government is in unprecedented fluctuations and jumps. In recent months, Rouhani has been talking about $ 15,000 at the end of his government. But yesterday, the price of the dollar crossed the border of 26 thousand tomans and recently it has been pulled to an insignificant decrease in the middle of the 25 thousand toman channel. Fluctuations in the price of the dollar are very bad for the country’s economy. This price fluctuation of 1000 and 500 Tomans in one day indicates that the dollar can create a catastrophic situation for the Iranian economy and we must think as soon as possible to monopolize and calm the market. In the following, we will examine this issue. Please be with Artan Press.
*** The dollar is afraid of the vague future of Barjam
Fluctuations in the price of the dollar in recent days have embittered many people, traders and foreign traders in the country. In the days when the liquidity in the society has reached its minimum and the government has provided the conditions for an unprecedented recession by eliminating the liquidity of the society through the stock exchange in the past year. We are witnessing unreasonable fluctuations in the foreign exchange market. These fluctuations in the price of the dollar can reduce the resilience of investors and traders. On the other hand, the dollar exchange rate does not correspond in any way to the figures traded these days.
One of the main reasons for the inflammation in the dollar market is the ambiguous state of the negotiations. Iran does not know that there is an expectation on the way to Borjam as a result of the sale of Iranian oil. The American side stubbornly resists its demands and Iran does not back down. It has been announced in recent weeks that the outcome of the Barjami talks will likely be a long way off. In these circumstances, the government prefers to keep the dollar rate in the middle of the channel at 25,000 tomans.
*** Unprecedented fluctuations in the price of the dollar in the last days of Rouhani’s government
In addition to political factors, a series of economic measures are taking place in the last days of the delivery of governments, which gives the foreign exchange market the opportunity to increase prices. Numerous factors, such as the growth of the dollar, have caused the asset market to rise in other sectors as well. Factors that affect parallel markets simultaneously. The first is to discuss the future course of negotiations and the resumption of sanctions and the resolution of sanctions.
The second factor is the discussion of government budget deficits and the discussion of increasing government deficits and debts. Based on these two very important factors, inflation expectations are formed. Inflation expectations also have a huge impact on prices in the asset market. The government budget deficit is a significant figure. Like previous governments, the budget deficit is likely to be offset by rising dollar prices. That is why we are witnessing such days in the last days of the government. Fluctuations in the dollar are likely to continue for several days after the new government takes office.
*** The outcome of the final negotiations is far from the expectations of the parties
In the early months of the negotiations, there was negligence and optimism about the outcome of this round of talks on both sides. This led to the impression that the dollar would depreciate significantly. But over time, this scenario was met with skepticism. The growth of the price of the dollar and reaching the rates of 26 thousand tomans in a situation where the Iranian economy is damaged by the corona and the unemployment rate is not controlled can lead to a major economic disaster.
Negotiations have stalled in recent weeks. Because it was expected that the nuclear negotiations in the current government would end and this did not happen, the expectation in the markets has been reversed. It is also expected that the new government will continue to pursue the talks, which have not announced a specific date for the resumption of talks. All of these issues have paved the way for market disruption and excuses on the part of producers, price-takers and speculators.
*** The role of government budget deficit in dollar price fluctuations
But in addition to political issues, it is not bad to seek economic disaster in Iran from the perspective of the budget deficit and its close relationship with the dollar exchange rate and dollar price fluctuations. It has been reported that we will have a budget deficit of more than 400,000 billion tomans this year. This budget deficit must be covered either by the National Development Fund or by selling foreign currency or selling government shares. The scenario of selling government shares is currently ruled out.
Because the government has used enough of this scenario to eliminate liquidity last year. Most likely, it will be the turn of the dollar price fluctuations. This scenario could cause severe damage to the markets, disrupt the price order and intensify the severe recession in the market. In the last days, the government must set a fair figure for the dollar exchange rate and send the new government to the square with the real dollar exchange rate.
*** Grow financial markets and help the dollar price fluctuation scenario
In August, the return on asset markets was reported to be positive. This caused the exchange rate to grow in line with the financial markets. During this week, the foreign exchange market, unlike previous weeks, was on an upward path and the price of the dollar increased by 4.5% and the euro by 3.5%. The price reached 6.3% compared to other markets. Meanwhile, the stock market index increased by only 0.4 percent, and thus the lowest return in the first week of August went to stock market investors. Fluctuations in the price of the dollar may owe part of its rise to the mobilization of financial markets. But it should be noted that at current prices, the dollar seems to have reversed some of its growth.
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