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Iran Economy Update
Issue 98/2017 TUESDAY NOVEMBER 14TH
Iranian currency loses values amidst growing regional tensions
The following graph shows how the Iranian rial has lost close to 3% value against the US dollar in less than a month, from just below 40,200 on October 9 to above 41,300 on November 14.
This relatively sharp rial depreciation has captured the attention of a number of the local media outlets, most of whom speculating that the seasonal change in demand for foreign currency (as demand for foreign currencies usually goes up in the last month of autumn) has caused the foreign exchange offices to increase the price of the US dollar and other hard currencies.
Donyay-e Eghtesad, a leading Iranian economic newspaper however has proposed a different analysis, arguing that the increase in the rate of ‘money transfer order’ to the UAE (dirham) is the primary cause of this increase. Donyay-e Eghtesad wrote that most of the currency offices in Tehran refuse to sell hard currencies in the hope of further increase in prices. The speculations on a likely tension in relations between Iran and the UAE was another reason for which the market speculators anticipated further depreciation in the rial value and declined selling hard currencies, added Donyay-e Eghtesad.
On note, a few days ago, and just after the Yemeni’s Houthi rebels fired a ballistic missile towards Riyadh, the ultra-conservative Iranian newspaper Kayhan ran a headline saying Dubai would be the next target for Yemeni’s Houthis. According to some observers, Tehran supports the Yemeni Houthis but denies allegation of its involvement in the recent missile attacks against the Saudi kingdom. Donyay-e Eghtesad wrote that some foreign currency market players cite the recent escalated regional tensions as another reason for their anticipation of further rial depreciation in coming days.
39800 40000 40200 40400 40600 40800 41000 41200
Iran's rial value against US dollar
14 Nov 41,130 9 Oct
41,140
2 France Total says he may revisit Iran deal to protect interests in US
In an interview with CNN Money, Total CEO Patrick Pouyanné reiterated that his company will revisit the $5 billion gas deal with Iran if it fails to find a “legal framework”, and that it will follow the regime of sanctions. Pouyanne referred to the assets his company has in the US, which was increased last week with the purchase of a portfolio of liquefied natural gas assets from ENGIY, and underscored to protect them. "We work in the U.S., we have assets in the U.S., we just acquired more assets in the U.S." He then postponed his ultimate decision to January, when the US congress decides about President Trump’s policy towards Iran. "I hope by that time {January], Congress will have an answer for the [US] president and the president will have to renew, or not [renew], the certification."
Some Iranian observers wrote on their social media networks that making such remarks by the Total CEO before the planned visit of French President to Tehran in 2018 may have aimed at taking more concessions from Iran during the upcoming meeting of the two presidents.
The editorial of the Tuesday issue of the daily Shargh, penned by International Relations University Professor Dr. Kayhan Barzegar is on the regional developments and their implications for Iran. The author argues that the main purpose of Saudi Arabia in its recent policies is not to wage a new war in the region because given the power transfer conflicts in this country, they lack sufficient national capacities to ignite a new war. “The main purpose the Saudi regime pursues is the formation of a an international/regional coalition against the Islamic Republic’s national power in a long period of time in order to crumble it from within, just like what happened for the former Soviet Union that after some years of confrontation with the West in a process of several years, it was gradually left economically vulnerable and forced to become compatible with its once political rivals.”
Kayhan Barzegar argues that to this end, the Saudis are trying to reverse the trend of the JCPOA and hinder the economic openings initiated by the nuclear deal whereby undermining the Iranian regional position. “The full implementation of the JCPOA could result in enormous economic opening for Iran and attraction of foreign investment and putting an end the misperception that Iran poses a strategic threat to the West. [To prevent this trend] they [the Saudis] have resorted to their traditional instrument of money and financial credit to coax President Trump and offered him some $110 billion in cash and financial credits to change the direction of the White House foreign policy.”
