In recent months, the Iranian currency market has been facing an increase in the dollar rate under the influence of a series of economic and political factors, including the tensions between Iran and the United States and the expectations of market participants. In the meantime, the intervention of the Central Bank since October 11 and the supply of dollars with the aim of affecting the market trend has once again raised the question of whether the policymaker has set a certain limit for the exchange rate and why he did not act before the dollar reached higher levels. Kamran Soltani, the former secretary of the currency exchange association, in an interview with Khabaronline, referring to the increase in the dollar rate, believes that the central bank’s delay in intervening can be a sign of targeting the rate of 270,000 tomans. Also, referring to the developments in the gold market and the outlook of the exchange rate, he predicts that the process of weakening the value of the national currency will continue until the end of the year.
The former secretary of the currency exchange association believes that the central bank could have entered the market before the dollar rate reached the range of 270 thousand tomans, but delayed its intervention until the currency price reached this level. An issue that, in his opinion, can be a sign of the targeting of this rate by the politician. Soltani also predicts that the price of the dollar will exceed 300 thousand tomans before the beginning of 1406.
increase in exchange rate; The result of political tensions and the policy maker’s performance
Referring to the rising trend of the dollar price in recent months, Kamran Soltani said: “We have seen a significant increase in the dollar rate in the market, following the trend that started in September. This trend continued in October, and at least until October 11, when the central bank started supplying dollars, the rate of each US dollar reached about 270,000 tomans.
Stating that this price increase can be analyzed under the influence of two main factors, he added: On the one hand, the tensions between Iran and the United States and the change in the tone of the parties affected the market’s expectations, and on the other hand, the policy maker’s performance was such that the currency price continued to rise.
Soltani believes that the central bank could have acted sooner to manage the currency market, but it waited until the dollar reached the range of 270,000 tomans. According to him, this delay in the intervention is one of the clues on the basis of which questions can be raised about the policymaker’s targeting of the exchange rate.
Do the dollars 270 One thousand tomans was the target rate of the central bank?
Referring to the consequences of the currency exchange rate increase for the country’s economy, the former secretary of the currency exchange association said: the increase in the currency price leads to the growth of inflation, but at the same time, it is one of the methods that governments use to compensate for the budget deficit. Because with the increase in the exchange rate, the Riyal income from foreign exchange sources also increases.
Emphasizing that the rate of 270,000 Tomans can be considered the target rate of the Central Bank, he explained: “I think the exchange rate of 270,000 Tomans was the target rate of the Central Bank. “Because the central bank could have intervened earlier than this recent one and somehow stopped the continuation of the increasing trend, but it waited until the dollar reached its desired price and then entered the market.”
To explain this view, Soltani pointed to the market situation at the beginning of summer; When the rate of each US dollar was around 170 thousand Tomans. According to him, if the central bank had intervened at the same time, it would have been possible to prevent further increase in the exchange rate, but such action was not taken.
He emphasized that this trend can be considered as an analytical hypothesis for making the assumption that the current exchange rate is in line with the policymaker’s desired range. This perception is Soltani’s analysis of the central bank’s behavior and does not in itself mean the official approval of such a goal setting by this institution.
the short-term outlook of the dollar; Temporary stability or the beginning of a new wave of increase?
This foreign exchange market expert also said about the short-term outlook of the dollar price that in the current situation, the exchange rate is apparently stabilized in the existing price channel. According to him, if nothing special happens that leads to big fluctuations, it is possible that the price of the dollar will remain in the same range in the next week or two.
However, Soltani stressed that political developments could change this outlook. According to him, the occurrence of war or basic management of tensions can create different conditions in the currency market.
At the same time, he does not consider the short-term stability to mean the end of the upward trend of the exchange rate and believes that after a few weeks, the dollar may enter the upward path again.
Why did the price of gold decrease in the domestic market?
Referring to the relative decrease in prices in recent weeks, Soltani said that the price of gold in the domestic market is affected by two important factors, i.e., the free dollar rate and the world price of gold.
According to him, during the last two to three weeks, the rate of the US dollar remained almost within a certain range, and at the same time, the global price of gold also decreased and reached the range of four thousand dollars per ounce. The combination of these two factors led to the reduction of gold prices in the domestic market.
Referring to the current state of the gold market, he believes that the recent drop in prices can attract buyers. Soltani says those looking to preserve the value of their savings can consider buying gold as one of their options.
However, his assessment of the low risk of buying gold is an analytical point of view, and a price drop in the past alone does not guarantee that the price of gold will rise or fall further in the future.
Prediction of dollar crossing from 300 A thousand tomans before the year 1406
In the end, the former secretary of the Foreign Exchange Exchange Association, referring to the outlook of the foreign exchange market until the end of the year, said that he expects the rising trend of the dollar price to resume after a period of relative stability.
He believes that the available evidence indicates that the value of the national currency will continue to weaken until the end of the year, and based on this, he predicts that the price of each US dollar will cross the border of 300,000 Tomans before the beginning of 1406.
This prediction is made in a situation where the future course of the exchange rate is still dependent on variables such as political developments, inflationary expectations and monetary policy makers’ decisions; Factors that can affect the intensity and direction of market fluctuations.
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