*Note: Data are based on the Iranian calendar year where each month ends approximately on 20^th day of the corresponding month in the Western calendar year. Month's numbers for these data are converted to the closest western month only for convenience. (The current year of the Iranian calendar starts from March 21).

 

Inflation and Exchange Rate

Despite concerns of most of the economic analysts on inflation rise in the current year due to the increased liquidity and foreign currency rates, the monthly inflation rate is still announced below 1% while there are serious hesitations on preserving the current situation. Considering the expected increase in price of transportation services, energy products, certain basic goods and medicine in May, we need to hear the reports of this month in order to examine the policies of government on inflation control.

Also, the increased US dollar official exchange rate from 38,000 IRR to 42,000 may increase the cost of import goods except for those basic goods for which the government is going to pay the foreign currency rate spread.

 

Interest Rate

As was predicted, after ups and downs of March 2018, the interest rate has been adjusted from 24% to 22%. However, given the expected circumstances of society on the increased rate of foreign currency, real estate, gold coin, and liquidity challenges of banks, the rate’s move down to below 20% is very less probable.

 

Real Estate

Because of the two-week holiday each year in April, the transactions volume in this month is always less than other months. The number of transactions in April this year was even less than the similar period last year. A key factor of this has been higher prices, i.e. about 30%, compared to the previous year. Still, it seems that as long as the inflation expectations of society on future inflation and foreign currency rate are not adjusted, the rise in transactions volume and price fall would be less expected. No special change in trend of transactions volume is expected for the months ahead compared to the last year, while change in prices depends upon the inflation and foreign currency rates fluctuations.

* Based on CBI’s latest report on Tehran housing sector.

 

Foreign Trade

April sees traditionally a positive trade balance due to drop in imports. However, the increased rate of foreign currencies over the recent months caused the April exports to go up 15% compared to the similar period last year. This made the trade balance of 375 M USD in April 2017 to reach 604 M USD in April 2018.

Meanwhile, the government’s recent approval that requires the companies to sell their export dollar at the rate of 42,000 IRR may lead to less exports and increased trade deficit over the coming months.

 

Equities

The government’s recent approval that requires the companies, most of the listed companies, to sell their export dollar at the rate of 42,000 IRR together with the JCPOA-relevant decision to be declared on May 12^th have caused higher uncertainties, plunge in trade volume and price fall. It seems that the current situation would last for a while until elimination of political ambiguities and advance of sales prices as well as foreign currency rates.

 

Assets' Returns (1 Year, Trailing)

 

GDP

 

Abbreviation

B USD: Billions of U.S. Dollar

CBI: Central Bank of Iran

M IRR: Millions of IR Rial

 

About Mofid Mofid Securities is a leading brokerage and investment advisory firm in Iran. As the largest full-service broker, it provides domestic and international clients with a range of trading and investment services including online stock trading, mutual funds, ETFs, and managed accounts as well as market reports and commentaries.  Mofid publishes this newsletter, Iran Market Reporter (IMR), in order to keep its readers updated on the latest news and events of Iranian capital market, especially Tehran Stock Exchange (TSE), as well as valuable information for individual and institutional investors. Iran Market Reporter (IMR) is distributed exclusively via email amongst Iranian analysts and potential investors who have worked closely or have been in contact with Mofid Securities Company. Subscription to this newsletter is by online request only.

 

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