Dollar to reach 60,000 tomans by New Year’s Eve
Dollar to reach 60,000 tomans by New Year’s Eve. According to Iran Gate, the price of each US dollar in Tehran’s free currency market has surpassed the 52,000 toman mark, amid a rapid and significant decline in the value of the rial. Now, market participants who believed the dollar’s ceiling rate for 2022 would ultimately be in the 50,000 toman range are changing their strategy and are expecting a 60,000 toman dollar by the arrival of Nowruz 2023.
Tehran’s free currency market is witnessing astonishing dollar rate records every hour and moment. Many believe this record-breaking trend will continue until the end of the current year, and it’s not unlikely that the 60,000 toman ceiling for the dollar rate will soon be broken.
Historical dollar record after Raisi’s promise to control prices
Last week, Ebrahim Raisi promised to control the exchange rate when each US dollar was trading around 48,000 tomans. However, just five days after this promise, we are now witnessing a 52,000 toman price for the dollar in Tehran’s free market.
Although the government has announced it does not recognize these rates, the point is that markets pay no heed to government officials’ statements. Prices of all goods, from housing and cars to food and services, are all influenced by the ever-increasing and exponential decline in the value of the rial.
Although economists believe markets are still reflecting the impact of the 40,000 toman dollar, in other words, current consumer goods prices have not yet adjusted to the 52,000 toman dollar, and one should expect an unprecedented jump in goods and services prices with the arrival of Nowruz 2023.
60,000 toman dollar in 2022
According to most experts, as long as Ebrahim Raisi’s economic team remains in its current composition, sanctions continue, and there is no slightest breakthrough in monetary transactions, there will undoubtedly be no ceiling for the dollar rate increase, or more accurately, the decline in the value of the rial. But the question arises whether the dollar rate might break the 60,000 toman ceiling this year.
Currency market analysts and participants believe that in the final days of 2022, Iran’s economy will face very challenging times. On one hand, the government promises price control, certainly relying on currency injection policies, but on the other hand, everyone knows the government’s access to currency resources is severely limited, and the Central Bank cannot engage in widespread currency injection in the market.
If such a possibility existed, we would certainly still witness a stable dollar price after the end of the Fajr decade, and the current astonishing records would not have been set. Interestingly, immediately after the end of the anniversary celebration of the Islamic Revolution’s victory on February 11, the dollar price entered an upward channel, and to this day, more than 15% of the national currency’s value has been lost in less than the past 10 days.
Given these conditions, experts believe the possibility of recording a 60,000 toman rate for the dollar in the free market before the arrival of Nowruz 2023 is entirely plausible and cannot be ignored. Naturally, the government and the Central Bank will continue actions such as restricting media in reporting prices or limited currency injection. However, analysts believe that crossing the 57,000 toman price channel for the dollar is a signal for the currency rate to enter the 60,000 toman channel in 2022.
In simpler terms, if in the remaining days of the current year, the dollar price also crosses 57,000 tomans, we can certainly expect to see a 60,000 toman record for the currency rate in the coming days. Given the evidence of government and Central Bank behavior, it seems unlikely that there will be any possibility of suppressing or compressing the dollar rate spring in the remaining days of 2022. In fact, it should be said that the probability of breaking the 60,000 toman ceiling for the dollar rate is not only not small but also equals the likelihood of the price stagnating in the 50 to 55 thousand toman range.
Identifying the floor and ceiling of currency prices in 2023
The coordinates of Iran’s economy indicate the presence of a ticking time bomb under the rial, a bomb that could explode at any moment with a small spark, but the timing of this explosion cannot be predicted. However, what can be analyzed is predicting the currency rate assuming the country’s current conditions remain unchanged.
Currency market participants are currently designing a new strategy for 2023, expecting a ceiling between 70,000 to 75,000 tomans. The floor of these analyses is also in the 55,000 to 60,000 toman range.
Although some economists believe that if the country’s current conditions do not change and there is no breakthrough in monetary transactions, the US dollar might even be traded in the 85,000 to 95,000 toman range in 2023. This analysis, based on increased pressures against the Islamic Republic and the worsening conditions for accessing the country’s currency resources, is an analysis that, if realized, could pave the way for new protests that would destabilize the foundations of governance.
Overall, if we look at the currency market with a balanced perspective, the likelihood that the price of each US dollar will fluctuate in the 65,000 to 70,000 toman range and also end 2023 in this range is higher. However, when these prices will be seen and felt is another matter, depending on global and Iranian developments in politics, economics, and even society.
