Iranian Currency Market Navigates Diplomatic Shifts and Internal Dynamics
Recent days have witnessed significant fluctuations in Iran’s foreign exchange market, highlighting its heightened sensitivity to diplomatic and political developments. The US dollar’s surge past 107,000 tomans in the unofficial market not only set a new record but also clearly reflected inflationary expectations and the reactive sentiment of economic actors. This sudden jump demonstrated the direct impact of international news and foreign policy decisions on market psychology, once again establishing the dollar as the primary indicator influencing other markets.
However, the dollar’s subsequent sharp decline to below 100,000 tomans underscored the powerful role diplomatic progress can play in shifting market direction. Traders and investors now operate in an environment where any new political or economic development can alter the currency market’s fragile balance. This situation emphasizes the critical importance of continuously monitoring both international and domestic developments, creating a market outlook characterized by both uncertainty and anticipation.
Dollar’s Surge Amidst External Pressures
In recent weeks, the dollar climbed from approximately 85,000 to a peak near 107,000 tomans, driven by increased concerns over external policy mechanisms and foreign pressure. Experts emphasize that this surge was largely psychological, leading economic actors to purchase foreign currency and gold as a hedge against risk. Shayan Arani, a financial markets expert, noted, “Capital exited the stock market, which itself fueled demand in the currency market.”
Nonetheless, news of an agreement between Iran and the International Atomic Energy Agency (IAEA) increased selling pressure, causing the dollar to fall below 100,000 tomans in unofficial trading. A concurrent drop in Tether and other cryptocurrencies confirmed a decline in real dollar demand, indicating that the emotional trading atmosphere had given way to more cautious expectations.
Role of Domestic Policy and Liquidity Management
Alongside international factors, domestic economic conditions played a decisive role in the currency fluctuations. Javad Fallahian, another financial markets expert, stated, “The monetary base and liquidity continue to grow, and government policies to curb it have not been sufficiently effective.” He emphasized that even in the event of an international agreement, this internal factor would continue to drive the dollar’s exchange rate higher.
Fallahian described the recent fluctuations as a “price respite” and predicted that unless a major shift occurs in foreign policy or the macroeconomy, the growth in the exchange rate will intensify from the Iranian months of Aban and Azar (October-November), peaking in Dey (December).
Market Rebound and Equilibrium Range
Following the initial decline, the dollar once again trended upward, surpassing 103,000 tomans. Experts believe the market has yet to achieve stable equilibrium, with rates remaining in a fragile range. Arani explained, “Some concerns have now subsided, and the exchange rate has returned to the 100,000 toman range, but stabilizing this level is heavily dependent on the outcomes of political negotiations.”
He also noted that the Central Bank’s recognized and confidential tools, including open market operations and foreign currency supply, can play an effective role in managing fluctuations, though their impact will only be tangible if political tensions decrease.
Short and Long-Term Market Outlook
Analysts believe the dollar’s future remains subject to two main factors: diplomatic developments and domestic monetary and banking policies. In a positive scenario, the continuation of negotiations and international engagement could reinforce a decrease in the dollar’s rate to the range of 98,000 to 100,000 tomans. Conversely, should external pressure mechanisms be activated or tensions increase, a rapid return of the dollar to higher channels is possible, with the short-term equilibrium range potentially rising as high as 130,000 tomans.
The currency market in recent weeks has again demonstrated that, more than any economic variable, it is influenced by political developments and psychological expectations. The agreement with the IAEA managed to bring about a temporary reduction in the dollar’s rate, but the market’s future path is tied to the continuity of political engagement, liquidity management, and the tools of the Central Bank. Investors are now watching political developments more closely than ever to discern the dollar’s next move.