Iran’s currency the rial is fast losing its value and reaching historic lows.
Today it went past the 30,000 rial per USD rate.
It’s not difficult to imagine the negative impacts of this development on Iran’s economy. Pushing up the price of imports and with it the rate of inflation are just some of the most fundamental impacts. Job losses are expected to rise even further.
One would have expected that under such circumstances, the Tehran Stock Exchange (TSE) would fall.
After all, which stock exchange would not fall during time of increasing inflation, unemployment and a fast falling national currency?
Well, it seems that the TSE is defying the odds, again. While Iran’s currency has lost more than 20% of its value in the last month alone, the TSE has in fact increased by 4000 points from 25,000 to almost 29,000.
In fact things have been so good with the TSE that two years ago the Iranian parliament ordered an investigation. It was not followed up in any meaningful way, unsurprisingly so.
For a regime that presents itself as being anti- American and anti- capitalist, having a stock exchange does seem rather hypocritical.
Well this is not the first time the regime says one thing and does the other. Its financial interests are far more important than its ideals and its rhetoric.
So what is exactly causing this financial miracle? I wrote about its causes in August 2010.
This is one bubble which will pop eventually. When it does, it will be silent, but deadly for the regime and those in the Iranian public who have shares. Unfortunately, many are poor.