How far will the dollar price drop?
According to Iran Gate, after the completion of the speech by Seyyed Ali Khamenei, the Supreme Leader of the Islamic Republic on Monday, 21 Khordad 1402, the dollar price dropped by over 2,000 tomans. Observations indicate the formation of currency selling queues in Ferdowsi Square and Istanbul Intersection.
It was around the early days of Khordad 1402 that the decline in the dollar price in the free market started. The rate gradually decreased from 55,000 tomans to 52,000 tomans. Suddenly, with the news of the exchange of prisoners between Iran and Western countries, this decline intensified, and the dollar was traded in the 40,000 toman range for the first time this year.
However, this price decline intensified even more on Monday afternoon, to the point where each US dollar was traded at a rate of 46,000 tomans. But it returned to the 47,000 toman range, in other words, the market believed in the limited imminent agreement after the completion of the speech by the Supreme Leader of the Islamic Republic, and this caused the exchange rate to decline more rapidly.
How far will the dollar fall?
As mentioned, the currency market and its participants are taking the news of a potential agreement seriously. Now, if the most optimistic scenario, which could lead to the release of $24 billion of Iran’s blocked resources, becomes a reality, it is highly unlikely but possible that the exchange rate will drop significantly.
To answer this question, it is important to understand that the current decline in the dollar price is entirely related to market sentiments. Market participants in the currency and gold markets have accepted the notion that an economic opening will occur. If the best and most optimistic scenario in this field becomes a reality, it can be expected that the dollar rate will decrease to around 42,000 tomans in the short term.
In other words, if the West, especially the United States, allows the mentioned $24 billion to be made available to Iran in cash, it is highly probable that the Ibrahim Raisi government will engage in currency injection in the market. This is why analysts believe that the possibility of the exchange rate dropping to around 42,000 tomans also exists.
However, even if this scenario is implemented, it should be known that this price reduction cannot be sustainable due to the fact that the inflation rate is still very high. Experts believe that if this scenario occurs, the exchange rate of the dollar will fluctuate in the range of 42,000 to 45,000 tomans for about two months. However, it is expected that after this two-month period, the price spring will once again go down and the dollar rate will enter an upward trend.
Price ceiling in 1402
Assuming that the government, under Ibrahim Raisi, has access to blocked foreign resources and the dollar price falls to the range of 42,000 tomans, experts also believe that the exchange rate will enter an upward phase again. According to market analysts, when the current inflation rate is fluctuating around 70%, expecting the strengthening of the rial against the dollar cannot be a logical and natural expectation.
It is said that within a maximum period of two months, predictable downward fluctuations in the price of the dollar can occur. However, these fluctuations cannot be sustainable. In other words, it is expected that after the mentioned two-month period, we will once again face an increase in the price of the dollar. The calculations published by experts on social networks indicate that new price ceilings will be set in the foreign exchange market. This means that if the government cannot turn off the inflation and money printing engine, it is expected that the exchange rate will return to the 50,000 toman price range and even reach the 60,000 to 62,000 toman price range by the end of this year.
If there is no dollar involved.
All the points and analyses presented so far have been based on the assumption that the promises and news published by media close to the government are true. But if these news are not accurate and the Islamic Republic does not have access to the $24 billion, what fate can be imagined for the dollar?
As mentioned, the current price drop in the currency market has been caused by the shock of news. Now, if we assume that the market concludes that the published news has no basis in reality, the situation for the government and the central bank will become much more chaotic than the current state. It has been proven that when the market becomes divided and loses confidence in the government, after a price collapse, it will enter an upward phase, breaking the previous price ceiling with much greater speed and intensity.
Experts believe that if the second scenario occurs, the return of the dollar exchange rate to the 60,000 tomans channel should be published within a maximum of one month, in a way that this time each US dollar may be traded around 65,000 tomans within 3 to 4 weeks.
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