*Note: Data are based on the Iranian calendar year where each month ends approximately on 20th 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
Consumer goods and services price index experienced a jump of 3.4% in July and pushed Y-O-Y inflation to grow by 18%. The Y-O-Y inflation seems would reach the end of the year by over 30%. Also, 10% growth of the producer inflation would send the consumer inflation higher.
As expected, the government has not been successful in control of prices and has agreed with the foreign currency secondary market of which the impact is projected to show off in inflation of August.
The bullish capital market and price drivers in parallel markets have increased redemption of the fixed income bonds and conducted the cash out of the bond market. A simultaneous issue of nearly 3,000 billion IRR new bonds by public and private sectors triggered the interest rate to move up. No adjust in the interest rate is expected as long as cut in inflation amid the expected rate of inflation, liquidity shortage of banks, and movement of cash out of banks.
In spite of reduced real estate transactions in recent two months, prices are still on the rise. It seems we approach end of the ascending trend of prices in housing amid relatively stable parallel markets. Prices in housing sector are expected to go stable in the second half of the year. An important note here is the comparison which the sellers make between this market and other ones like foreign currency and gold coin. The significant difference is immovability of real estate that makes us to forecast less inflation for housing sector compared to the other tradable goods including dollar and gold coin. Expectations of the sellers in real estate are projected to adjust.
* Based on CBI’s latest report on Tehran housing sector.
July saw less foreign trade following the government’s decision on ban of export dollar sales by the Iranian exporters at market exchange rate, and no order registration by importers. Following run of foreign currency secondary market, we expect to witness increased foreign trade in August esp. in export. Also, the trade balance in 7 months ahead is expected to move up compared to the similar period last year.
Ban of export dollar sales by exporters at market exchange rate together with approaching U.S. sanctions caused the capital market to go in recession in July. However, given reconsideration of the government regarding sales of export dollars of the exporters at prices close to the market exchange rates it is predicted that the exporters would gain much as the stocks prices and the Overall Index are expected to increase.
Assets' Returns (1 Year, Trailing)
B USD: Billions of U.S. Dollar
CBI: Central Bank of Iran
M IRR: Millions of IR Rial
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